Leading investment management company DSP Investment Managers believes value is emerging in the midcap stocks as the interest cycle is close to its peak and the macros are improving.
"...the time is right to bottom fish into midcaps," said Gopal Agrawal, senior vice president and head of macro strategy of the company, in an exclusive interview with CNBC-TV18. “Generally, midcaps tend to do well when there is momentum in the economy and interest rates are on a downward bias,” he said.
According to him, the macros for India have started improving due to fall in crude prices and Fed chairman Jerome Powell's statement turning dovish.
"In the quarter gone by, the topline was good but margins were under pressure because of higher input costs but going forward with fall in crude prices, the commodity prices will cool off and aid margins for companies," he said. "All this has given a boost to the market rally."
According to him, the biggest risks for the market are both from local and global factors. "Trade tensions globally are a big risk and locally, election outcome and availability of funds remain a risk. However, if these issues are tackled then there is inherent buoyancy along with robust domestic consumption,” said Agrawal.
Currently, equity inflows are robust and stable because there is a stable flow coming in from EPFO money and on the systemic investment plan (SIP) side the count is increasing, he said. "So, while other asset classes are out of favour, equity as an asset class is likely to do well over a period of time,” he said. One can still assume about Rs 8000-9000 crore of continuous flows into the market, he added.