Influential investors such as RK Damani and Rakesh Jhunjhunwala have started buying into midcaps and smallcap stocks in recent months, betting that some of these select stocks will make a comeback this year after a tepid show in 2019 due to macroeconomic concerns.
RK Damani, the founder of DMART and one of the most influential investors in the Indian stock market, recently bought mid cap stocks such as Spencer Retail, Camlin Fine and Simplex Infra. Damani, who is famous for his Midas touch, also raised stake in India Cements and Delta.
Rakesh Jhunjhunwala, often dubbed India’s Big Bull, raised stake in mid-cap companies such as Rallis India and Fortis Healthcare. In Fortis Healthcare, Jhunjhunwala increased his stake to 2.04 percent from 1.6 percent in the quarter ended December. Jhunjhunwala also purchased shares of Laurus Labs and IIFL Securities, affirming his affinity for a mix of small and mid-cap stocks.
Ashish Kacholia, another major investor, bought a large chunk of shares of Religare Enterprise. He also raised stake in small-cap stocks such as Birla Soft and Apollo Pipes.
The year 2019 stood out as bipolar year for Indian equities. The Nifty and Sensex rallied 12-14 percent but the mid and small-cap index underperformed significantly, with the Nifty small-cap index down 10 percent.
India’s small and medium businesses continued to bear the brunt of a government ban on high denomination currency notes in 2016. Several of these companies were also hurt by the patchy introduction of Goods and Services Tax a year later.
But since the beginning of 2020, many foreign brokerages have been recommending investors to focus on midcaps and small caps. Ridham Desai of Morgan Stanley, in his 2020 outlook report, said, “Value and growth to beat quality and small and micaps to beat large caps.”
Brokerage Jefferies' has recommended 10 midcap stock ideas for investors to maximise their portfolio gains this year.
First Published: Jan 22, 2020 11:56 AM IST
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