The year 2020 has been a roller coaster ride for investors but bulls managed to push the benchmark indices into unchartered territory. Thanks to global liquidity, the recent up move in markets pushed many large caps in the overbought zone, and the big trend to watch out in 2021 will be in Midcaps.
It makes sense to tweak the portfolio post the recent up move and investors can book profits in large caps, and focus on select small & midcaps, Gautam Shah, Founder & Chief Strategist, Goldilocks Premium Research said in The Market Podcast with Moneycontrol.
“The market has climbed all wall of worries but nothing could derail the uptrend which started in March. With market trading near 13,000 being overweight on large caps does not make sense. If one has to book profit it has to be in the large caps which have run up 30-50% in a matter of few months,” said Shah.
Shah further added that the bigger opportunity is in small & mid caps. For the next few months, the trading strategy would be to go underweight on large caps and overweight on small & mid caps.
Outlook for 2021:
Market reclaimed record highs of 12,400 earlier in the month of November and the momentum pushed the Nifty50 index above 13,000 as well, but it all came as a surprise.
“When we started rallying in April, the best we thought could go is 12400-12500. But, with the ease with which Nifty50 has taken out the Feb and March highs, it looks like the market has a lot of strength. I do feel that the index which investors should be watching is not Nifty but the Midcap index which could lifetime highs in the coming year,” says Shah.
On Nifty, if the index crosses 13200, we could see another 5-7% upside. But, the bigger gains would be in the mid cap index,” explains Shah.
We have seen sector rotation in the last few months. “There are pockets of opportunities in IT, as well as Pharma,” highlights Shah. The dark horse could be insurance, as well as Realty.
Our top stock idea is HDFC Life is our top pick that could offer a supernormal return. In the IT index, we like Infosys and Wipro and they could give 30-50% return. And, in pharma Shah likes Biocon.
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