Smallcap, midcap & financial stocks still offer good scope for investors to buy on bottoms-up basis, say experts

S&P BSE Small cap and mid cap indices have declined nearly 8% and 11% respectively in the last two months as on March 11. The former corrected by over 5.5% and the latter dipped by more than 4% in the last one month alone. On Friday, BSE Small Cap index gained over 243 points to settle at 27,141.43, while the Nifty Midcap 100 was up by almost 100 points to 23,309.95.  

In 2021, BSE midcap and small cap indices outperformed the benchmarks with gains of around 38% and 61% respectively. In CY 2021, Barometer Nifty50 and the S&P BSE Sensex had clocked around 21% and 24% respectively.

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Despite massive correction in midcap and small indices this year, expert is of the view that these stocks still offer good value.  

"Russia-Ukraine crisis only poses a near-term headwind"

"The conflict between Russia and Ukraine is only a short-term issue. There is good scope to invest on a bottoms-up basis in mid-cap & small-cap segments," says Sachin Shah, Fund Manager, Emkay Investment Managers Limited.  

He was also bullish on Pharma, IT Engg R&D, Auto, Infra, Travel and healthcare sectors.  

"In the current calendar year 2022 (last two months), BSE Mid Cap Index is down by 8% and BSE Small Cap Index is down by 11%. What is important is that both the indices on a 1-year basis are still up by 15% & 31% respectively. In fact, BSE Small-Cap index continues to outperform the large-cap indices Sensex & Nifty," said Shah.

Looking at stock-price specific corrections, there are many-many stocks, which have corrected by more than 25%-50% from their peak levels over the last 4-5 months, underlines Emkay Investment fund manager.  

"The conflict between Russia and Ukraine poses a near-term headwind for domestic equity markets and there is always good scope of investing on a bottoms-up basis in Mid-cap & Small-cap segments," he adds. 

No major dent to markets from FII outflows

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services is of the view that financial stocks too offers good side from current levels as FIIs relentless selling have failed to impact market much.

 "Sustained FIIs selling has failed to dent market much. Despite FPIs selling IT equity worth Rs 10984 crore in February, however, IT index has outperformed so far this month, he said.  

Vijayakumar is of the view that this trend is likely in financials too, where FPIs have been major sellers since last October. "Investors can use the present weakness in markets to accumulate high quality financials," he added.  

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)