Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Is it right time to invest in these stocks?
Mon, 9 Aug Pre-Open

Mid and small cap stocks are having a good FY11. This is given that these stocks in general have outperformed their large cap peers since the start of April 2010. Against the BSE-Sensex's gains of a mere 3%, the BSE-Midcap index has risen by 9% during this period. As for the BSE-Smallcap index, it is up 10% since March end.

Data Source: BSE

Mid and small cap stocks in fact have been outperformers since the bull run started in March 2009. This is after the big declines these stocks had seen in 2008. As we stand now, these two categories of stocks aren't looking cheap anymore. Not even if one factors in a good growth in corporate earnings over the next 2-3 years. As such, following the momentum and buying these stocks (just because they are rising) is highly risky.

So, should mid and small caps be a strict 'no-no'?
Well, the answer is - it depends on your long-term needs and risk appetite. But purely as a matter of prudence, one looking to build a portfolio from a 10 to 15 years perspective can allocate 10-15% each to mid and small caps...and quality stocks in each of these categories.

Treat this allocation towards mid and small caps as just a guide and, we repeat, allocate your equity portion using your understanding of different kinds of companies across different levels of market caps.

Overall, the opportunities to buy good companies at low valuations are still not available in plenty. In such a scenario, the better thing to do will be to make a list of good quality mid and small cap stocks - well-managed simple businesses - that will be worth buying if the markets crack.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

Equitymaster requests your view! Post a comment on "Is it right time to invest in these stocks?". Click here!


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Feb 23, 2018 (Close)