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More than 100 stocks have dropped around 30 percent from April
Updated on 30 May 2017
The S&P BSE Midcap index rose 1.2 percent, while the S&P BSE Sensex rallied 4 percent or nearly 1,200 points from April, but more than 100 stocks have slipped from their record highs with cuts as deep as 30 percent.
The recent trend seen in markets suggests that small and midcap stocks, which rallied ahead of expectations, could face some profit booking and this theory has already started to reflect in prices.
Almost 60 stocks saw double-digit cut after hitting record highs in the month of April despite strong momentum seen in benchmark indices which rose to a fresh lifetime high of 31,214.39 on the S&P BSE Sensex and 9,637.75 on the Nifty.
The following is the list of mid cap stocks that have corrected
Nifty & Sensex. Similarly, a midcap index surged by nearly 30 percent so far in the year 2017.
The rally seems to remain unbroken with impartial correction seen at a certain interval, but the investor should remain cautious as the trend will halt anytime soon. Analysts advise caution at current levels and suggest partial profit booking in midcap space.
The valuations of some midcap stocks have already run-up ahead of fundamentals and if investors are planning to buy stocks on declines they should choose bottom up stories which have stable growth model and stable cash flows.
Largecaps looking attractive
After a sharp rise in midcap valuations, analysts are more confident about the largecap story going forward which are likely to gain traction on the implementation of goods & services tax as well as global liquidity.
The immediate strategy for an investor with larger allocation towards midcap stock will be to book-profit at mid resistance-level and build a corpus to buy during any major dip in price.
As the economy is on the cusp of turnaround coupled with earnings growth likely to recover and implementation of reforms at the regime, the market valuations will tune towards its fair value in coming period, suggest experts.