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Last month, Ashok Leyland saw the highest number of exits by 62 funds across MFs, PMSes and ULIPs, shows data pulled from the records of Finalyca by PMS Bazaar.
Indian Hotels, Mphasis, NMDC and SAIL saw 31 exits each. Others in the top 10 list includes ACC, Tata Communications, Persistent Systems, BHEL and Voltas.
On the other hand, top new picks by funds included Bank of India, Indian Bank, HPCL, BHEL, Federal Bank, Cummins India, Voltas, Indus Towers, Escorts Kubota and Oil India.
In terms of portfolio weightage, fund exposure went up in midcaps went up in stocks like Coforge, Sona BLW Forging, Dixon Tech, United Spirits and Lupin and went down in Aurobindo Pharma, Ashok Leyland, Bharat Forge, UPL and Page Industries.
Also read | Saurabh Mukherjea picks 3 new stocks for HNI investors in his PMS fund
After having a fantastic 2023, both mid and smallcap stocks have been under pressure in the last one month with the Nifty Midcap index falling 7% and Nifty Smallcap index cracking about 10% amid concerns over a possible bubble building in the broader market.
Amid earnings headwinds, elevated valuations and neutral liquidity, analysts at Nuvama Institutional Equities say we may be at an inflexion point.
“This is owing to sharply decelerating SMID (small and midcap) profits as input price tailwinds fade while top-line recovery is getting delayed, moderating urban incomes (a strong pocket so far), and slowing India order book of industrial companies—which suggests domestic capex momentum could be peaking, hurting sentiment of cyclicals,” said Prateek Parekh and Priyank Shah of Nuvama.
The next churn, they bet, is likely to be towards underperformed quality sectors like private banks, insurance and FMCG – the traditional defensives offering earnings resilience in a downturn.
Anand Rathi expects earnings growth of Nifty 50, Nifty Largecap 100, Nifty Midcap 150 and Nifty Smallcap 250 during 2024-25 and 2025-26 to be robust – in all cases above 11%.
“Even if we assume fair PE multiples of the respective indices would be significantly lower than the average forward PE multiples during similar phases of business cycles in the past, we do not observe any major froth in the Indian equity markets currently. On the contrary, Nifty Smallcap 250 seems to be trading significantly below the fair valuation,” said Sweta Jain of Anand Rathi.
As far as earnings are concerned, the brokerage expects largecaps to deliver slightly better than average earnings growth in 2024-25. The smallcap index is likely to deliver the best earnings growth in 2025-26 while midcap earnings growth expectation is below its long-term average, it said.
Also read | Smallcap stocks give up to 2,000% return in FY24 but brace for a bumpy ride
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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