Expect market to be dominated by large-cap stock rallies: Rajat Rajgarhia

In a chat with ET Now, Rajat Rajgarhia, MD-Institutional Equities, Motilal Oswal Securities, shares his views on the market outlook as well as large-cap and mid-cap stocks. Excerpt:

ET Now: The large cap stocks are doing nothing. Nifty is getting completely jammed but the polarised nature of the market is changing because there is lot of price action in mid and small cap stocks. Are you worried about that?

Rajat Rajgarhia: I am not surprised because these are just cycles in a trendless market right now. If you look at the kind of performance that midcaps did for 2013, they rallied from their lows in October. However, for the year as a whole, almost the midcap index was still down by 5-6 per cent, underperforming the large cap index which went up by 8 per cent.

You are seeing some optimism getting built in but that this will essentially remain a large cap market especially given the magnitude of events which are lined up from now till May, whether be it US economy, domestic monetary policy or elections.

You will see strings happening between large caps and midcaps. The latter needed that realignment with the market while index was at 6300 levels. You have seen some process of realignment and those midcaps which are essentially export plays or which have been plays on dollar strength have been the ones which have done very well over the last two-three months.