Let us understand the selling in the small and midcap space. Do you think the selling is slightly overdone? It is a bull market and is it time to buy small and midcap stocks again?
In my interaction with some of the fund managers I found that they are all sitting on cash. I think they are looking around for the opportunity to buy. However, immediate attention is not on small and midcap stocks. They believe at this point of time, it would be better to get into some of the largecaps which have corrected by around 10-15%.
One theory is that there is an opportunity in largecap companies where the growth programme is seen to be much bigger and much visible. While there’s nothing fundamentally wrong with small and midcap companies, valuation wise, some are still too expensive and so unless and until, there are very compelling criteria or a situation, immediate money is not going to be into small and midcaps.
The other area where an amount of money is being kept aside is also for the new IPOs which are coming into the market as some of them are larger IPOs like Paytm even Nykaa is opening up now and we are likely to see some of the quality participation happening into these IPOs as well. This is where the allocation of money is being reserved. My take is that the larger cap companies would probably find more preference going forward as far as allocation is concerned and from that perspective, correcting downside in the market is probably getting arrested, maybe selectively the market would start getting stabilised in individual stocks.
