{"id":43536,"date":"2023-09-24T08:39:07","date_gmt":"2023-09-24T08:39:07","guid":{"rendered":"https:\/\/histarmar.net\/?p=43536"},"modified":"2023-09-24T08:39:07","modified_gmt":"2023-09-24T08:39:07","slug":"midcap-stocks-have-room-to-correct-buy-the-dips-chris-wood","status":"publish","type":"post","link":"https:\/\/histarmar.net\/business\/midcap-stocks-have-room-to-correct-buy-the-dips-chris-wood\/","title":{"rendered":"Midcap stocks have room to correct; buy the dips: Chris Wood"},"content":{"rendered":"

Thus far in calendar year 2023 (CY23) the Nifty Midcap 100 index has surged 29 per cent, as compared to 11 per cent gain in the Nifty 50.<\/strong><\/p>\n

<\/p>\n

The sharp rally in the midcap stocks has made valuations expensive, and there is room for a correction, wrote Christopher Wood, global head of equity strategy at Jefferies in his latest note to investors, GREED & fear.<\/p>\n

The midcap index, Wood said, now trades at 24.1x 12-month forward earnings compared with 18.7x for the Nifty.<\/p>\n

Rising crude oil prices, he believes, are another worry for India, which imports nearly 80 per cent of its annual crude oil requirement.<\/p>\n

“In this respect, there is clearly room for a correction in the mid-cap area, most particularly as a continuing rise in the oil price has the potential to create some renewed inflationary noise in India, just as it does in the developed world.<\/p>\n

“Still, by historical standards, valuations for the large-cap stocks are not particularly extended. Any pullback in the markets is a buying opportunity,” he said.<\/p>\n

Thus far in calendar year 2023 (CY23) the Nifty Midcap 100 index has surged 29 per cent, as compared to 11 per cent gain in the Nifty 50.<\/p>\n

This, Wood said, has largely been driven by a renewed pickup in domestic equity mutual funds’ flows, which hit Rs 29,000 crore in August, the highest level since March 2022.<\/p>\n

Going with the flow<\/strong><\/p>\n

Meanwhile, foreign portfolio investors (FPI), too, have come back to Indian shores in CY23 and put in a net Rs 1.31 trillion in the Indian equity market (till September 8).<\/p>\n

In comparison, they had invested only Rs 59,539 crore in Indian equities during the same period in 2021, and withdrew around Rs 1.7 trillion between January – September 2022, data shows.<\/p>\n

Domestic institutions, meanwhile, have kept the faith all this while, putting in Rs 28,313 crore between January – September 2021, Rs 1.62 trillion during the same period in 2022, and Rs 1.15 trillion in 2023 (till September 8), data suggests.<\/p>\n

That said, the risks for the markets from a near-term perspective are mounting, analysts suggest.<\/p>\n

Even while remaining invested in this rally, investors, advises V K Vijayakumar, chief investment strategist at Geojit Financial Services, can consider some profit booking, particularly in the over-heated mid-and small-cap space.<\/p>\n

“In the micro-cap segment, hope and momentum, not fundamentals are driving the rally.<\/p>\n

“Even though the undercurrent of the market is bullish, the high valuations and risks like surging crude and rising dollar index can impact the market negatively.<\/p>\n

“Brent crude at $94 is a major macro worry, which the market cannot ignore for long.<\/p>\n

“The rising dollar index that has breached 105 and the attractive US bond yields (10-year at 4.28 per cent) will force the FIIs to sell aggressively soon,” Vijayakumar said.<\/p>\n

The rally in the Nifty 50 index from the 19,000 to the 20,000 mark has been quick – taking merely 52 trading days from July 2023 till September 2023, as compared to 18,000 to the 19,000 mark when the 50-share index took 425 trading sessions from October 2021 till June 2023.<\/p>\n

The Nifty 50 now trades at a 12-month forward price-earnings (P\/E) of 18.8x, a 7 per cent discount to its own long-period average (LPA), according to analysts at Motilal Oswal Financial Services (MOFSL).<\/p>\n

“Although the Nifty-50 is at a new high and is creating a lot of buzz, on a two-year basis, it is up around 7 per cent from the October 2021 high.<\/p>\n

“It also trades at a 12-month forward P\/B of 3x, a 6 per cent premium to its LPA.<\/p>\n

“The upside from here on will be a function of stability in global and local macros, and continued earnings delivery versus expectations,” wrote Gautam Duggad, head of research for institutional equities at MOFSL in a recent note co-authored with Deven Mistry and Aanshul Agarawal.<\/p>\n

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities\/schemes or any other financial products\/investment products mentioned in this article to influence the opinion or behaviour of the investors\/recipients.<\/em><\/strong><\/p>\n

Any use of the information\/any investment and investment related decisions of the investors\/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.<\/em><\/strong><\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Thus far in calendar year 2023 (CY23) the Nifty Midcap 100 index has surged 29 per cent, as compared to 11 per cent gain in the Nifty 50. The sharp<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"yoast_head":"\nMidcap stocks have room to correct; buy the dips: Chris Wood - histarmar<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/histarmar.net\/business\/midcap-stocks-have-room-to-correct-buy-the-dips-chris-wood\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Midcap stocks have room to correct; buy the dips: Chris Wood - histarmar\" \/>\n<meta property=\"og:description\" content=\"Thus far in calendar year 2023 (CY23) the Nifty Midcap 100 index has surged 29 per cent, as compared to 11 per cent gain in the Nifty 50. 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