Stay away from midcaps realty, infra for some clarity: Analysts

MUMBAI: Few high profile arrests after CBI investigation into bribe-for-loan scam has rocked the stock market and bearish investors offloaded realty and infrastructure stocks.

According to Shankar Sharma of First Global, the correction in broader markets was on account of margin pressure. “Successive falls are triggering stop-losses across stocks. Stocks unrelated to scam are also being punished,” he said.

Some of the stocks from midcap and smallcap space have fallen over 40 per cent in the past one month. There are concerns that liquidity may dry up as bankers turn cautious in sanctioning fresh loans, forcing builders to cut prices in improve cash positions.

According to analysts, the market is like falling knife at the moment and investors should wait for a bottom formation. Their advice is to stay away from realty and infra stocks before some clarity is out on the issue.

Ajay Parmar, Head of Research, Emkay Global Financial Services, said “Investors should wait for sometime for clarity to emerge on all grounds from legal perspective. They should keep-off these stocks and don’t go and just buy.”

He added that investors can look at buying opportunities in smaller midcap stocks like Federal Bank, Allahabad Bank and UCO Bank.

BSE Midcap Index recovered some losses after plunging around 10 per cent early morning. At 12:30 pm, the Index was down 3.12 per cent.

Ashish Shroff, technical analyst, Ambit Capital, has advised investors to hold on cash at the moment. “They should wait for the market to stabilise and form a bottom. We expect some normalcy next week and that could be the time for buying.”