Look for quick beta in tier-2 midcaps

Right now the beta is certainly in favour of banks, auto ancillaries and a lot of tier-2 sectors or tier-2 stocks because your tier-1 stocks have already had a very sharp rally, says Vivek Mavani, Independent Investment Advisor

Within banks, would you stick with the top five or would you want to go bottom up?
Stick to the large banks and keep mostly to private banking space. The preferred picks continue to be Kotak Bank, HDFC and ICICI Bank. If I had to name a fourth one, then one can look at SBI in the PSU space. Four banks in a portfolio is good enough from a weightage point of view.

What about the home improvement scene? Everything from cement to tiles to sanitaryware and paints has been doing well. Does that investment still hold or is the beta is in favour of the banks now?
Right now the beta is certainly in favour of banks, auto ancillaries and a lot of tier-2 sectors or tier-2 stocks because tier-1 stocks have already had a very sharp rally. Tier-2 is where the stock price action has lagged the performance. And now that we are seeing very good performances, excellent and a positive outlook given out by managements, it is time for beta in tier-2.


As far as the home improvement space is concerned, paints, ceramic tiles, wood and plywood companies have had consistent rallies over the last five years, playing on the consumer spending theme. Most of the companies seem fairly priced. The growth story continues but there is no cyclicality to growth while earnings are galloping. Now is certainly the time to play cyclicals where earnings are going to be galloping. Consistent growth stories and long-term compounders have had their day. It is not to say that they are going to go out of fashion, but the long- term compounders will take a back seat and quick beta is to be made in tier-2 midcap companies across sectors.