The recent correction in the broader market is a healthy sign, while the focus should be on on ‘Bottom-up’ approach while buying midcaps, says Krishna Kumar Karwa, MD, Emkay Global.
Speaking to CNBC-TV18, Karwa said more money was moving into large-cap names.
In the last one month, there has been a decent amount of profit-taking as far as the smallcap and midcap stocks are concerned. Almost 15-25 percent correction has taken place in many of the smallcap and midcap stocks, he noted.
"That puts the exuberance in check but we are in the midst of a correction in a bigger bull market. So investors should do well again to look to invest in the smallcap and midcap stocks over a medium-term perspective. There has been some froth, which has got created and that is why some correction has been seen. But smallcap and midcap stocks are basically to be invested in a bottom-up basis," Karwa said.
He continues to remain bullish on the cement sector as Q1FY22 earnings from cement companies were strong. He believes higher infrastructure spending from the government and private sector capex augurs well for the overall cement sector and will spur demand.
"From a medium-term perspective, we are very positive on many of the cement companies. I believe some of the mid-sized companies – the valuation is very attractive and they should give you much better returns than maybe the largercaps," he said.
On the IT sector, he said that the IT stocks have a massive opportunity and have solid tailwinds, while the fintech theme has immense potential. Midcap IT stocks can outperform large-cap names, he said.