Ashwani Gujral's top picks: Good time to look at beaten-down mid-caps
On a micro basis, it’s a good idea to start looking at midcaps which have corrected 40-50% and are not likely to face liquidity issues and have stable brands.
Updated:
Ashwani Gujral
Chief Market Strategist, ashwanigujral.com
The Nifty closed down 0.12% for the week. Overall, the Nifty trades below all major moving averages and is consolidating before the next major move. The Nifty must break out of 5400-5600 range.
The market is in a comatose state, shocked by the rate hikes by Reserve Bank of India (RBI), an inflation rate that refuses to come down and investors who are now more interested in FMPs.
This week the US increased margins on almost all commodities, which brought them crashing down. The economic growth rates around the world do not justify the current prices. This has not been a bad idea, considering the raising of rates in the West would have impacted growth rates.
The next key trigger for the market would be the impact of the end of QE2 and interest rate hikes in Asia. On a micro basis, it’s a good idea to start looking at midcaps which have corrected 40-50% and are not likely to face liquidity issues and have stable brands.
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As inflation comes down and rates start reducing, midcaps will come back the hardest, as they have corrected for over two years. While large caps could have some more downside, midcaps selectively have started coming back. The weekly levels on Nifty, Bank Nifty, CNX IT are 5476, 10721, 6594, respectively.
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