Top 10 stocks which slipped up to 60% in Nifty 500 index in FY17

Just Dial lost nearly 30 per cent, followed by Wockhardt which dropped 25 percent, Reliance Communication slipped 22 percent, and Tata Elxsi plunged 21 percent in the same period.

Midcap and smallcap stocks emerged as top performers in the year financial year 2017 outperforming benchmark indices by a wide margin, and the outperformance is likely to continue in the next financial year as well, suggest experts.

If we look the sector from a valuation perspective, midcaps are trading premium to the big boys, largecap stocks. But, analysts are not concerned about expensive valuations just yet because of key macro triggers such as the implementation of goods & services tax as well as a pickup in the economy in second half of CY2017.

“Mid-cap are trading expensive to historical valuation almost 25.6 times trailing and 21 times forward, But the rally is likely to hold as there is a shift from unorganized sector to organized sector due to demonization and implementation of GST in next few months,” A.K.Prabhakar, Head of Research at IDBI Capital told Moneycontrol.com.

“Large cap looks very attractive, but I will not ignore midcap. There is always an attractive growth story. Stocks which are very attractive even now include names like Century Ply, Abbott India, AIA Engineering, Nilkamal, Arvind, Coromandel International, Siemens, Sobha, Oberoi Realty, Syngene International to name a few,” he said.

Market Outlook:

Despite the various challenges in FY17, what favoured Indian equities was the domestic liquidity or money coming from domestic institutional investors (DIIs) which poured in over Rs 20,000 crore in Indian equity markets in the financial year.

Despite corporate earnings growth still below potential, markets held on to support levels which is a bullish sign. FY18 will also see the fruits of important reforms undertaken by the government such as demonetization and GST which are likely to benefit small and midcap stocks more than largecaps.

“Going forward, with domestic policy certainty in place, softening of interest rates, government’s increased focus on rural and infrastructure spending, and signs of recovery in global economic growth, FY18 is expected to be a much better year for India Inc. in terms of earnings growth, partially aided by the FY17 low base effect,” Hitesh Agrawal, EVP & Head – Retail Research, Religare Securities Ltd told Moneycontrol.com.

“A second consecutive year of favourable monsoon could also support earnings recovery next year. Thus, expecting 15-16% earnings growth in FY18, we believe that inflows would continue into Indian equities and should help the Nifty scale closer to the 10,000 mark in FY18 at which level, our market would trade at around 16-16.5x FY19E EPS,” he said.