In the last two days a lot of midcaps/smallcaps have corrected and a lot of portfolios would be down 5-10%.
But the amount of media coverage and panic is amazing as if stocks should only go up. There have to be corrections/mini crashes etc.
So lets look at the midcap and smallcap indices.
CNX Midcap Index Technical View
- Even when Nifty has dropped from 9100 to 7400 the Midcap Index has stood strong and also even made new highs in August 2015.
- Nifty made many lower lows in the process at 8000/7550 but Midcap Index is still holding above it.
- Even the last 3 days of sharp fall has not broken the Nifty equivalent lows of 7550.
CNX Smallcap Index
- In the last 15 months smallcap index has been able to stay above the same lows for 5-6 times.
- Even the recent 3 days sharp fall has not broken recent lows equivalent to 7550.
So as we see at indices there is nothing to worry about. When i mean worry about is a 30-40% fall. A drop of 15-25% in stocks and index is something which can happen often.
2 weeks back right at the top of Smallcap Index had made this post-
MultiBaggers – Google Trends crosses 2007 highs !!
And now the midcaps/smallcaps have dropped quite a bit. I believe nothing has changed fundamentally in 10 day. This is how markets are.
Disclosure - Even we bought into a few stocks and are hanging on to them and seeing a 10-15% correction and buying much more too in Analyse India Big Value 3.0 and Technical Traders club in last 2 days.
Conclusion:
Midcaps and Smallcaps look interesting but it will be very selective from here on and companies with decent fundamentals will do well and crappy stocks would go sideways to down.
Continue to like textiles sectors and focusing on Chemical Companies.
If you are a patient investor there is nothing to worry. This actually is one good opportunity to accumulate stocks and increase equity as part of networth.
Also for more of my snippets follow me on Twitter - @nooreshtech
