India's midcap rally amid Covid may be poised for a break
Published On: Thursday, April 22, 2021 | By: Team KnowMyStock
The outperformance of India’s midcap stocks over the larger stocks since the coronavirus pandemic engulfed global markets may take a breather. Some Fund managers are currently avoiding midcaps based on global economic cues and valuations. They said there is more safety in buying large stocks now that India has become the epicenter of virus resurgence in Asia, while inflation is set to rise in the U.S. and China as the world’s two biggest economies are rebounding. The S&P BSE Midcap Index has outperformed the benchmark S&P BSE Sensex Index in all but five months since the end of 2019, according to data compiled by Bloomberg. The smaller stock measure has gained nearly 33% in that span, more than double the rise in the broader benchmark, with the outperformance becoming particularly pronounced amid the recent market chill.
While the Sensex is now flirting with a technical correction after climbing to a record high in February, expensive smaller stocks may have more to lose, the fund managers said.
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