Headline index valuation fair but not cheap: Credit Suisse

Mumbai: Valuation froth in midcaps has settled but investors should be careful in picking mid-cap stocks, according to Credit Suisse Wealth Management India. India's GDP growth could remain subdued for the next few quarters, and if economic uncertainty persists it could push funds into certain large-cap stocks that are perceived as safer, resulting in higher market concentration, the report said.

The report added that the recent macro-economic data do point at some green shoots in economic activities. Credit Suisse Wealth said it would wait for a few more months and observe the macro trends before calling it a full-fledged recovery.

The BSE MidCap index has gained 4.1 per cent so far in 2020, compared to a 0.2 per cent gain in the Sensex in the same period.


"If the recovery turns out to be broad-based and sustained, this could offer a good buying opportunity in midcaps. The valuation froth of midcaps has certainly settled," said Credit Suisse. "However, the headline index valuation is currently fair but not cheap and investors should therefore be careful in picking mid-cap stocks," said Credit Suisse.