Analysts on the road ahead for mid- & small-caps
DHARMESH SHAHHead-Technicals, ICICI Securities
WHAT DO THE TECHNICAL INDICATORS INDICATE ON MID AND SMALL-CAP STOCKS? We are in a structural bull market depicted by the acceleration of upward momentum in broader market post breakout from the fi ve-year consolidations of the Nifty Midcap vs. Nifty ratio line.
However, the key point is that in the past 24 weeks, a spectacular rally of about 42% hauled weekly and monthly stochastic oscillator in overbought territory, indicating the possibility of an extended breather cannot be ruled out. Going ahead, strong support is placed at 38,000 as a confluence of 80% retracement of the Aug-Sep rally coincided with 50-day EMA, which we expect to hold.
WHAT SHOULD INVESTORS DO? In a secular bull market, secondary correction is common wherein, historically, the midcap index corrected to 8-10%.
Therefore, the ongoing correction should be utilised to construct quality midcap portfolio from a medium-term perspective. Sectorally, we remain positive on BFSI, IT, auto, PSE, consumer discretionary, and infra space.
AJIT MISHRAVP-Technicals, Religare Broking
WHAT DO THE TECHNICAL INDICATORS INDICATE ON MID- AND SMALL-CAP STOCKS? The broader indices look overheated after gaining about 35% in the last six months and are likely to witness some correction now.
Besides, the trendline hurdle on the weekly chart combined with the gap between the indices level and the 20-day exponential moving average also adds to the possibility of profi t taking. On the index front, we are eyeing 38,600-39,400 in the Nifty Midcap and 11,800-12,100 zone in the Nifty Smallcap to act as supports.
WHAT SHOULD INVESTORS DO? Investors should book partial profi ts and maintain trailing stop losses in existing trades.
