The midcap index has seen a big outperformance compared with largecaps so far this year. While the Nifty is up 32 percent on a year-to-date basis, the midcap index has seen a 52 percent rise. But some of these high momentum stocks have come under pressure in the past couple of days leading to the midcap index slipping four percent from its October peak.
Anshul Saigal, Head and Executive VP at Kotak PMS, and Anupam Tiwari, Equity-Fund Manager at Axis MF discussed the midcap universe.
“Corrections and speed breakers are part of the game. People who make money are the ones who traverse these speed breakers and don’t get permanently stopped on speed breakers,” said Saigal.
'You cannot go wrong in India'
Saigal believes this is a period for one to hold on to their bets. “Having made so much money, just give it a little time, maybe in terms of time correction or even some price correction... Stay put, stay in the market. It will reward you over the next few years. Don’t be in the market for the short run. Have a horizon of three-five years. You cannot go wrong in India,” he asserted.
He believes the midcap gauge is trading at a premium to the largecap index, and in line with the smallcap counterpart.
“Historically, such moves tell us that it is a time to be cautious on those segments of the market and that is part of the game. Over a short period of time, you could see corrections. However, I have the least doubt in my mind that this is going to be India’s decade and if you traverse these speed breakers or corrections, you tend to make a tonne of money over the next 5-10 years,” he said.
'Time is the only answer to volatility'
Tiwari said one should not invest just by looking whether the market is going up or down. "It is a faulty thing, one should never do it," he cautioned investors.
“We cannot avoid volatility in the market. The most important thing that the investors have to look at is that whether he has done proper planning or not, whether the investment selection is right or not. He has to take a call on that basis. If you have selected the right product, stay put, give it enough time,” he added. "The only answer to volatility is time, nothing else," he said.
The government's bio-fuel strategy is one of the most elegant solutions for a complex sector, Saigal said. “With one stone, they have killed three birds. What they have done is that by enhancing their blending targets from five percent to 20 percent, they have given a road for the sugar companies as also for other bio-fuel companies. So the sugar companies have become profitable," he said.
Also, in a scenario where the company’s import bill comes down and sugar becomes profitable, the farmers start to get paid. "So it is a win-win (situation) for all three stakeholders in this sector. If we look at five-year horizon, we see secular growth in this space,” Saigal said.
For the entire discussion, watch the accompanying video.
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