The midcap and smallcap indices have pulled back from recent lows and some individual stocks have seen big gains in the last few weeks.
To discuss if this outperformance is likely to continue going forward, CNBC-TV18 spoke with Viraj Mehta, head of PMS and fund manager, Equirus Securities and Akash Singhania, executive group vice president and fund manager, Motilal Oswal AMC.
Singhania said, "Midcaps had underperformed in this calendar year. If you see one-year, almost 15 percent has been the negative return. Looking forward, midcaps would continue to trade in a tight range but with a positive bias."
According to Singhania, midcaps have seen a flat earnings growth in the last five years, however, this year expect 15 percent earnings growth for midcaps, "From a valuation perspective, the midcap index which is trailing at 30 times currently on a trailing 12-month basis can go almost 25 times, which is more expensive compared to history but it is in context of low earnings growth in the last five years."
Mehta said, "We have not really seen any high net worth individual (HNI) outflows as such. However, inflows which we had seen in 2017 and early 2018 may have dwindled a little. I don’t think their interest has dwindled a lot."
"Our HNI lot is quite smart and the place at which they see valuation being comfortable, they don’t mind putting money where the mouth is,” said Mehta,
"The market on an average irrespective of their earnings have lowered the multiples and stock price for a lot of the mid and small-caps."