The S&P BSE Small & Midcap indices have both outperformed benchmark indices in the week gone by but the recent rally in the broader market space also raises one big question – what should investors do now?
In ‘The Market Podcast’ with Moneycontrol, Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities said that investors can look at better entry levels, and a buy on dip strategy will work if someone is looking for wealth creation over a period of time.
“One could look at better entry levels, but yes any correction could be better entry levels for select stocks. A lot of quality mid & small-cap stocks have gone through the roof, and some of them are even trading at higher valuations than largecaps also. There is a differentiation which one needs to make because even penny stocks are also going up,” suggests Oza.
One could try and look at quality mid & small-caps that are available at reasonable valuations. There are dozens of stocks in the broader market space that are available attractive valuations when compared to their peak.
He says one should look at the small & midcaps selectively and don’t go away from the space. From a market perspective, Nifty doesn’t seem to be offering any good risk-to-reward ratio, but there are enough companies in the broader market space.
Smart investors who understand balance sheets, financials, and have been analysing companies can venture on their own in smaller unknown companies.
One must do some basic homework on the hygiene factors like promoter holding, pledged shares, ratios, cash flows, debt-equity ratio and valuations before taking higher exposure in any mid or small cap company.
(Tune in to the podcast for more)
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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