 "Caution emerges as mid-caps, small-caps rally past indices")
The markets have been on an uptrend after the Union Budget in February, with the benchmark Nifty 50 on the NSE (National Stock Exchange) moving up 14 per cent since then. Mid-caps and small-caps have gained more.
While the Nifty mid-cap index has moved up about 24 per cent after the Budget presentation, the Nifty Small-cap index gained 23 per cent. On the BSE exchange, its Mid-cap and BSE Small-cap indices outperformed the benchmark Sensex by rallying around 16 per cent and 17 per cent, respectively, during this period, compared with around 13 per cent rise in the latter.
Though the recovery has been sharp, the fall in the first two months (January and February) in mid- and small-cap indices, when the overall markets had corrected in line with global peers, was equally spectacular. While the Sensex fell 12 per cent in January-February, the BSE Mid-cap and Small-cap indices tanked 14 per cent and 19 per cent, respectively.
Outlook
So, what should you do now? Is it a good time to exit or at least partially book profits in these counters? Given the sharp recovery since February, analysts say investors need to be cautious and invest selectively. The rally in mid- and small-caps has to be backed by financial performance for the move to sustain.
From a fund flows viewpoint as well, mid and small-caps are favourites of domestic funds and retail (small) investors. The latter, analysts say, want to get into this segment, given the rally in their larger peers, which in turn is pushing up stock prices.
“Mid-caps always follow their larger peers and often witness sharper correction once the large-caps correct. However, I do not see this happening in the near term. Retail investors, who missed the large-cap rally post the Budget, now want to get in. This, in turn, could keep prices firm till mid May. By that time, a lot of companies will also announce their March quarter numbers and that will lead to a re-rating of these stocks. I feel investors still have a window of 15-20 days to play the mid- and small-cap theme. However, I would not bet on these scrips beyond that,” said Prakash Diwan, director, Altamount Capital Management.
Repco Home, TVS Motor, Suprajit Engineering, Eveready, Finolex Cables and PI Industries are some of the stocks Shenoy of Motilal Oswal has recommended to his clients.
“We also have a ‘buy’ rating on City Union Bank. Those who have an appetite for risk can also look at Andhra Bank, M&M Financial Services and Shriram Transport,” he adds.
While the Nifty mid-cap index has moved up about 24 per cent after the Budget presentation, the Nifty Small-cap index gained 23 per cent. On the BSE exchange, its Mid-cap and BSE Small-cap indices outperformed the benchmark Sensex by rallying around 16 per cent and 17 per cent, respectively, during this period, compared with around 13 per cent rise in the latter.
Though the recovery has been sharp, the fall in the first two months (January and February) in mid- and small-cap indices, when the overall markets had corrected in line with global peers, was equally spectacular. While the Sensex fell 12 per cent in January-February, the BSE Mid-cap and Small-cap indices tanked 14 per cent and 19 per cent, respectively.
Outlook
So, what should you do now? Is it a good time to exit or at least partially book profits in these counters? Given the sharp recovery since February, analysts say investors need to be cautious and invest selectively. The rally in mid- and small-caps has to be backed by financial performance for the move to sustain.
From a fund flows viewpoint as well, mid and small-caps are favourites of domestic funds and retail (small) investors. The latter, analysts say, want to get into this segment, given the rally in their larger peers, which in turn is pushing up stock prices.
“Mid-caps always follow their larger peers and often witness sharper correction once the large-caps correct. However, I do not see this happening in the near term. Retail investors, who missed the large-cap rally post the Budget, now want to get in. This, in turn, could keep prices firm till mid May. By that time, a lot of companies will also announce their March quarter numbers and that will lead to a re-rating of these stocks. I feel investors still have a window of 15-20 days to play the mid- and small-cap theme. However, I would not bet on these scrips beyond that,” said Prakash Diwan, director, Altamount Capital Management.
Repco Home, TVS Motor, Suprajit Engineering, Eveready, Finolex Cables and PI Industries are some of the stocks Shenoy of Motilal Oswal has recommended to his clients.
“We also have a ‘buy’ rating on City Union Bank. Those who have an appetite for risk can also look at Andhra Bank, M&M Financial Services and Shriram Transport,” he adds.