Experts point out select mid and smallcaps look good for medium to long term horizon. They name about 20 favourite stocks
The portfolio ‘Winners’ constitutes of stocks that are quality, has the market leadership, and structural opportunities. The portfolio includes names like IGL, Aarti Industries, etc, among others.
The road ahead for the market is bumpy and a lot will depend on the course of coronavirus pandemic. Moreover, global cues and measures of governments and central banks will remain important factors for the market.
While the large-cap stocks have been rising, experts believe as sectors, mid-caps and small-caps will take a longer time to pick up as bigger companies could be in a better position to grab higher market share in their respective sectors after the lockdown ends.
A lot of midcaps have corrected significantly in the recent market fall. I think there is a great opportunity in the mid and smallcap segments if someone has a timeframe of 3-5 years.
The Nifty Mid-cap 100 was up 15.4 percent in Apr’20, as against the Nifty’s rise of 14.7 percent. In the last 12 months, mid-caps were down 23% as against Nifty’s decline of 16 percent.
Due to the COVID-19 pandemic, most large and mid-cap stocks have corrected significantly. They are expected to remain volatile unless the issue of coronavirus comes under control.
Auto, auto ancillaries, NBFCs, private banks, and metals will witness recovery, says Umesh Mehta of Samco Securities.
Despite the broader correction in midcaps in 2019, when NSE Midcap was down by 5 percent, quality stocks have been largely resilient,
These stocks had fallen more than 50 percent during the Jan, 2018-September 2019 period.
HEG, National Peroxide and Lakshmi Machine Works are among the good bets according to experts
Markets have discounted tensions and benchmark indices hit all the highs, we expect the market to rally ahead of Budget 2020.
Some experts feel that the recent correction in the midcaps, which now trade at 5 percent discount to largecaps, will open a window for smart money to move in.
Investors who stay the course over a long run and remain invested will witness the power of equity.
Market is eagerly looking forward to some sort of stimulus by the government to kick-start growth, without which it would be difficult for corporates to report sustainable growth.
Data suggest that the S&P BSE Smallcap index has plunged by about 39 percent from its 52-week high while the S&P BSE Midcap index is down by a little over 20 percent from its peak, as of data collated on August 7.
Prudent trading and investing calls for restraint and investors must wait for signs of revival before jumping into quality mid and smallcap stocks, said Umesh Mehta, Head of Research, SAMCO Securities.
Technically, on an intraday basis, the market is diverging positively and forming "inverted head and shoulders", which is an indication of a likely shift in short term trend of the market.
18 out of 50 companies in the Nifty50 may remain more vulnerable for a fall as valuation comfort is clearly missing.
There are various value picks available in the midcaps currently, especially in the financial services sector such as AU Small Finance Bank and RBL Bank, said Amit Gupta of TradingBells
The recent correction is mainly led by the weakness in global markets, on mounting fear of an adverse outcome of the trade talks between the US and China
Notwithstanding the recent challenges, one must note here that the long-term India growth story is still very much intact
In the run-up to the elections, sectors such as consumption and infrastructure tend to be in the limelight. We are constructive on financials, healthcare and infrastructure sectors.
From a top-down basis, the market valuations look reasonable with Nifty-50 trading at 16.3X FY20E ‘EPS’ and 14.1X FY21 ‘EPS’ in the historical context and versus bond yields