The polarization between the mid- and large-cap stocks is likely to narrow down and the mid- and small-cap stocks are expected to perform better in the coming months, said Gautam Shah, founder and chief strategist, Goldilocks Premium Research.
Shah believes that there is a serious money-making opportunity the mid- and small-cap stocks in the next six to 12 months. "Buying into the midcap index or the basket right now, you just cannot lose money. I think there are supernormal returns to be made whether you look at the midcap or smallcap space," he said.
“I firmly believe that the midcaps are putting up a very strong attempt to breakout beyond 17,200 level. If that gets confirmed, the largecaps might take a backseat and the midcaps and smallcaps will do well,” he added.
Two-year bear market
Talking about the Midcap Index, Shah said, “It has been in a 2-year bear market and this is probably the 5th attempt by the midcap index to get pass the hurdle of 17000-17200."
"It’s an important trend line that we are watching along with some of the other technical figure and if the midcap index were to get past 17200 we are 200 points away from that number and then we are talking of a possible 1500 point rally and sometime in 2020 you could see a level of 20,000 on midcap index,” he said.
On Nifty front, he said, “We have been working with a target of about Rs 12,300-12,350. The Nifty almost got there a couple of days back and this is a bit of an area where the market can find some resistance.”
He further mentioned that dips towards 12,000 in Nifty must be used as a buying opportunity.
“The medium-term charts continue to look strong, the fact that many of the underperforming stocks and sectors are coming back, global markets are extremely strong. So all of these factors will propel the markets to greater heights and we are working with a medium-term target of about Rs 12,700-12,750. So till the market does not get to that point, I think every small dip will get bought into and that’s the way forward for 2020,” Shah added.