The Nifty Midcap index had fallen over 23 percent in the last 1 year till August 23. However, since finance minister Nirmala Sitharaman announced measures to boost the economy, the index has seen a rise of 3.5 percent in the last 5 sessions.
In the 2019 Union Budget, finance minister Nirmala Sitharaman announced a slew of measures that didn't sit well with the markets like an increase in the surcharge for foreign and domestic investors. To revive the weakening economy and bring back foreign investment, the finance minister on August 23 announced a rollback of the surcharge on the FPIs.
The Indian markets witnessed a sharp rally post the rollback and despite global headwinds. The Nifty50 has gained 3.3 percent since the announcement as compared to a 3.5 percent rise in the Nifty Midcap 100 index. However, for the year 2019, the Nifty Midcap 100 has fallen over 11 percent as compared to a nearly 2 percent gain in Nifty.
Ten midcap stocks have rallied over 10 percent in the last 5 days leading to this rise in the midcap index.
Among these, NBCC rose the most, up 25.9 percent followed by Housing and Urban Development Corporation, up 25.3 percent. However, for the last 1 year, NBCC declined nearly 50 percent, while Housing and Urban Development Corporation fell over 30 percent.
Among other stocks, Bombay Burmah rose 22 percent, Indian Bank 15 percent, Escorts advanced 14.5 percent, Dish TV surged 12 percent, Castrol India, rose 11.4 percent, Engineers India increased by 11 percent, Bharat Electronics gained 11 percent, and Varroc Engineering added 10.6 percent in the past 5 days.
For the last 1 year, these fell in the range of 10- 65 percent. Dish TV lost the most, down 65 percent, while Varrock Engineering and Bombay Burmah shed over 58 percent and 53 percent, respectively. The least fall was seen in Bharat Electronics, which fell 11 percent, and Engineers India, which slipped 13 percent.
Gautam Shah of JM Financial said that the broader markets have underperformed frontliners by a wide margin and after such a steep fall, he believes this is a great time to buy midcaps and sees room for a 1,000-point recovery in the Midcap index.
Rakesh Jhunjhunwwala also feels current levels offer an attractive opportunity to buy in the midcap space and whoever buys them at current levels will gain handsomely.
Meanwhile, brokerage Prabhudas Lilladher recommends investors to use these turbulent times to build a portfolio of companies with moats in their business and ability to withstand technology disruptions.
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