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Mid-caps may be dark horses

As a retail investor, do you tend to flock to high-profile gilt-edged stocks? Perhaps you should lend a thought to the mid-cap segment which, though less glamorous than their ‘large’ cousins, offer good openings. Manik Kumar Malakar reports.

business Updated: Jun 06, 2013 21:28 IST
Manik Kumar Malakar

As a retail investor, do you tend to flock to high-profile gilt-edged stocks? Perhaps you should lend a thought to the mid-cap segment which, though less glamorous than their ‘large’ cousins, offer good openings.

“Mid-caps outperformance is very high in the bull market,” said Yogesh Nagaonkar, head, Institutional Broking-Bonanza Portfolio Ltd.

In the past 10 years, analysts say, the mid-cap index has outperformed large caps. Volatility has also been less in that time, Nagaonkar said.

“We continue to remain bullish on mid-caps but with an investment horizon of another one to two years,” said G Chokkalingam, executive director, Centrum Wealth Management Ltd. Mid-cap companies only create substantial wealth in the long-term, given the time taken to build a credible business size and profits.

“Due to a prolonged phase of diminished risk appetite in capital markets, mid-caps have become quite attractive,” said Himanshu Pandya, senior vice-president and head, products and communication, ICICI Prudential AMC. “The CNX mid-cap is at over 20% discount to the Nifty index.”

Sharan Lillaney, a mid-cap analyst at Angel Broking, felt mid-caps have been overlooked by broader markets. “Once the Sensex makes new highs, mid-caps are likely to come into greater focus,” he said.

Dhananjay Sinha, an economist and strategist at Emkay Global Financial Services Ltd said there would be good oportunities in agri-related indexes like Dhanuka Agritech, GSFC and Coromandel in the coming quarters.