Sell smallcap, midcap stocks; markets will offer buy-on-dip opportunities: UBS

Among sectors, UBS prefers domestic-linked sectors such as automobiles, consumer durables, industrials / infrastructure, utilities, and real estate

The sharp run in the Indian smallcap and midcap stocks in the last few months has made analysts at UBS cautious on these two market segments. In a recent note, they suggested investor’s book profit in small-and mid-cap stocks and stick to the safety of their large-cap peers.

A sustained bull market rally in equities, earnings growth catch-up with large-caps, and strong momentum in institutional equity inflows, UBS said, have widened the outperformance of small-cap and midcap companies in India over large-caps in the last couple of years.