Is it time to book profits or cut losses in mid- and small-cap momentum stocks?

Is it time to book profits or cut losses in mid- and small-cap momentum stocks? Almost 70% of mid- and small-cap companies, which fetched returns of 75-200% between April and June, have reported a decline in revenues and profits for the quarter ended June 30 compared with the previous quarter.

Fund managers said investors in these stocks face the risk of steep declines once sentiment sours. Sales of companies such as NEPC India, Texmaco Rail and Quintegra Solutions have halved in the April-June quarter compared with the year-ago period.

Analysts are already advising clients to book profi ts in many of these names whose prospects remain hazy.

“Traders may have turned active in fundamentally weak companies to take undue advantage of the improved sentiment,” said G Chokkalingam, founder and CEO, Equinomics Research & Advisory.

“Investors should book profits in these cos that have run up sharply in the past three months.” ET takes a look at the performance of some of these stocks.