Market experts are advising investors to avoid mid and small-cap stocks despite their recent strong performance. This shift in sentiment follows the 2024 general election results, which saw the BJP-led NDA secure fewer seats than expected.
Market Reaction
The election outcome surprised the market, with BJP and NDA securing 291 seats, short of the anticipated majority. This result has raised concerns about the future performance of mid and small-cap stocks.
Recent Performance
- Year-to-date: Nifty gained 4.6%, Nifty Midcap rose 13%, and Nifty Smallcap increased by 11%.
- Last Year: Midcap index surged 53.5%, Smallcap index climbed 61%, compared to Nifty’s 22% rise.
- Last Month: Nifty up 1.2%, Midcap up 3%, Smallcap up 0.5%.
Expert Opinions
- Vaibhav Porwal, Dezerv: Cautions against investing in overheated momentum and small-cap stocks. Advises capitalizing on market dips for fresh investments.
- Bernstein: Maintains an ‘underweight’ stance on small and midcaps, favors largecaps.
- JM Financial: Prefers largecaps for valuation comfort.
- Axis Securities: Notes improved return on equity but sees reduced valuation safety in mid and smallcaps, expects a shift towards largecaps.
- Trivesh D, Tradejini: Recommends focusing on fundamentals and long-term potential, regardless of market cap size.
Conclusion
While mid and small-cap stocks have performed well recently, experts suggest a cautious approach due to election outcomes and potential market volatility. Investing in companies with strong fundamentals and capital efficiency is advised for better long-term results.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
