BSE small and mid cap indices at peak; experts sceptical

Mumbai: While the BSE small and mid cap indices are inching closer to their all time high, experts tracking the markets said that investors should strictly stay with quality stocks and should not get tempted by stocks which are trading at a very low prices. 

The BSE mid cap index last closed at 11,127.42, just a few points away from its all time high of 11,180.70, while the small cap index is now trading at 11,942.03, about 2,300 points away from its all- time high of 14,239.24. “The general risk appetite in the markets has gone higher. This is the reason why we are seeing such a sharp rally in small and mid cap stocks.

Moreover, the headroom in the large cap stocks for any further capital appreciation has come down because of which large money is chasing quality stocks in the small and mid cap segment,” said Deven Choksey, MD of K.R. Choksey Securities.    

However, he added th-at investors should stay invested in only quality stocks. “There will be temptation to put money in stocks which are avai-lable very cheap. Investors should avoid such temptations,” he said. In April till date, the BSE small cap index has given a return of 9.65 per cent while the BSE mid cap index has gained 5.05 per cent. This is when compared to 3.88 per cent gain registered by the BSE Sensex during the same period. 

Others feel that investors should avoid high debt companies and where there is high level of promoter pledging. “There are lot of quality companies in the small and mid cap segments. Investors should choose those companies, which have a sound management control, good track record, market share and high profit margin. 

Investors should strictly avoid companies with high debt and high pledging of promoters holdings,” said Jagannadham Thunuguntla, head of fundamental research at Karvy Stock Broking.