Many weak small and mid-cap stocks in bubble zone
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New Delhi: Small-cap and Mid-cap stocks (SMIDs) in general have become more expensive after the recent runup. Many weak (low growth plus low quality) mid-caps and small-caps are in bubble zone and caution is advised, says Vinay Paharia, CIO, PGIM India Mutual Fund.
Strong (high growth plus high quality) mid-caps and small-caps may still present opportunities for long-term investors. On a relative top-down basis, we are finding better upside in large-cap stocks versus mid-cap and small-cap stocks and see lesser earnings volatility for domestic consumption-oriented versus export-oriented sectors, he said.
In the near-term, premium valuation in the mid and small-cap segments of the market, any adverse union election results and rising geo-political issues are the key near-term risks to the Indian equity markets.
