Buy midcap stocks on good valuation, maintain 25% defensives in portfolio: Prakash Diwan

In a chat with ET Now, Prakash Diwan, Chief Portfolio Strategist, Prakash Diwan's Wealth Circle, shares his views on defensives.

ET Now: So what is the right investor approach right now be defensive?

Prakash Diwan: Investors always have to maintain some sort of a defence in the portfolio. But, some of the midcaps that people have picked up, there would be value there as we go along in such a dull and indifferent kind of a market. So while you have a core portfolio, which has about 20%-25% into defensive, accumulate good midcap stocks as you come across good valuations.

ET Now: Let us look at FMCG sector, do you think FMCG sector runs the risk of serious de-rating?

Prakash Diwan: We have seen them move into newer highs and nobody is expecting the crash to happen for most of these stocks. Because, we might get into a drought situation and things might get difficult for them and the challenge would probably be in FY14. I do not think FY13 would get impacted so majorly and that is exactly why nobody is re-rating them in a hurry at this point in time. Investors could start looking at them more cautiously beyond FY13 and not right now. They might not see newer highs but they could retreat from these recent highs that they have made but it would not be a dramatic cut.