Midcaps overvalued, vulnerable to further correction: Neeraj Dewan

In a chat with ET Now, Neeraj Dewan, Director, Quantum Securities shares his view on midcap stocks.

ET Now: How exactly would you advise investors to approach some of these midcap names?

Neeraj Dewan: Actually, a lot of these liquid midcaps became very expensive so they were over owned. All of those over owned active midcap stocks were available at 35-40 times valuation one-year forward, two-year forward. So, these are the kinds of stocks that are seeing selling and that selling may continue. At this level, they are the most vulnerable because there people are still sitting on profits and if one had bought them last year you are still sitting on profit. So, those are vulnerable and you can see some more selling there. That is why, one needs to be very particular what stock they are buying at what valuation. Now, if there are still stocks which are at very high valuations, I would rather avoid them for the time being.