Markets are again in a mood to fall. The Sensex fell 200 points on Wednesday. The midcap index has lost nearly 6% with leading stocks having fallen between 0.60-19%.
So, what are marketmen saying about the midcap space? Experts say not to get into the sector right now but to retain their positions if there is any.
Sudarshan Sukhani, Technical analyst, says that it is not a good idea to buy midcap stocks now.
Sukhani said, "All of them are falling. Bajaj Hindustan fell 12% yesterday and Bombay Dyeing has fallen a lot. When this correction will end, these stocks are the ones that will rally and will give us profits on the long side. There is no sense in trying, for the short-term traders like me, to time this market. We do not do it and so I am out of this midcap sector. My advice to people, who actually own them, is to stick to these shares, we are in a long-term bull market, although you may not believe it now, after a year or two, you will get money out of these equities. To buy them now is not a good idea."
PN Vijay, Investment Advisor, advises one not to panic and sell but to wait and watch, "The interesting thing about midcaps is that in most of them the story is intact. For example, in cement and sugar where we have seen carnage, the story by no means is over. So, don't average out, just sit there and watch it. But for heaven sake, do not sell and do not panic because there is no reason to panic."
Rather than catching a falling dagger, just wait, he said. "The short covering has to start. When that happens, that happens very quickly in India then these prices are so attractive, even if one gets it about 3-4% more, it is better to wait and buy on the uptake," said Vijay.
Further, Rahul Mohindar, Viratechindia.com, said, "One would not really imagine a much bigger crash from there. Yes, there is a negative sense in the immediate term. What one would sense more is that it is going to take a lot of time for this to consolidate and actually break back out. That is how I would read this kind of breaking in. This pays a much more important role only for an investor who is looking at a one-year time horizon."
According to Shyam Bhatt, Principal Mutual Fund, one saw most of the midcap counters fall because of profit booking from the retail side. Institutional selling in midcaps is negligible.
Bhatt said, "At the current valuations of midcaps there is no point selling into midcaps at this point of time and shifting into largecaps. Most of the selling in midcaps has been coming from the retail end; people want to book profits or collect whatever they can on the stocks, which they have been holding on for maybe six months to two years."
"That is why one might have seen most of the midcap counters fall off on low volumes. Institution selling in midcap stocks have been negligible according to us," he added.
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