Eicher Motors, Shree Cements, JustDial have been strong mid-caps: Rajat Rajgarhia

In a chat with ET Now, Rajat Rajgarhia, Director- Research, Motilal Oswal Securities shares his view on midcap space:

ET Now: Let us talk about the midcap space now and of late not only the midcap space has stabilised there are handful of midcap stocks which are now outperforming benchmark indices do you think in general midcap stocks are now looking stable and one should be a buyer in mid and small cap stocks?

Rajat Rajgarhia: Whenever you see the markets drifting down from 6000 to 5500 the midcaps have been making newer lows and whenever market moves back from 5500 to 6000 they recover somewhere about half of the losses that they have made.

The two important things which have helped midcaps in the last two-three weeks. First is that as the MSF rates have been brought down important to note is that the interest rates have been one of the big big damaging factors for the midcap besides the poor growth so as the MSF rates have been brought down and people have started seeing the yield curve turning more positive that in itself speaks well for the midcaps.

Secondly you always see some bottom fishing happening into the midcaps after the kind of battering that they took but most of these midcaps are still significantly down for this year while the Sensex or the Nifty looks 2%-3% up for the calendar year.

Many prominent midcaps are down even more but the market is also differentiating between the midcaps in two categories. One set of stocks which are companies like Shree Cement, Eicher Motors, JustDial, Bata where lot of people have been positive and then the other set of midcaps are may be some of the second tier private banks, PSU banks, some of the auto component names, infra names, capital goods, they have continued to be under pressure throughout this year.