27th Nov 2024

JainMatrix Investments, a Research Analyst firm, is pleased to present a note on Mid and Small Cap Market Trends. We have done some research and here are the key findings:

• The Sensex peaked recently at 85,900 (26Sep) and then fell to 77,100 (21Nov), a fall of 10.2%. For the NIFTY Midcap 100 the fall has been sharper at 11.7%, over the same period.
• The fall can be described as a recovery to better valuations, and investors can look at starting (or continuing) with equity investments and SIPs at these levels.
• Our rating and ranking of attractive sectors is:
  • Financials (Bank / NBFC)
  • Power sector
  • Auto and Auto Ancillary (manufacturing)
  • Infotech
  • Consumer QSR,
  • Also travel, tourism and hospitality, pharma and healthcare.
• Investing Trends: The trends we notice are:
  • Valuations have corrected sharply, but are not cheap yet.
  • However, valuations can remain expensive for extended periods, as we saw in 2004-07, and if they do not get excessive, it should not inhibit investors.
  • Mfg. and IT services can have an export component, the rest are more domestic-focused
  • From 2021 till recently, we have not had big broad corrections, but several waves of sectoral rises and micro-corrections, such as Infotech, Speciality Chemicals, Defense, PSUs, Shipyards and Rail stocks.
  • These cycles have in aggregate kept valuations in check.
  • IPOs too may now become more sober in terms of pricing and valuations, but this route continues to work, and throw up exciting companies, and encourage risk-taking promoters and Private Equity/startup investors.
• We do not want to choose or trade-off between Large-cap, Mid-cap and small-cap stocks.
• Large caps have had a big correction as the FIIs pulling out have been more invested in these.
• Mid-caps present the potential ideas, and if they scale, they are the large caps of tomorrow (and good investments too).
• Small caps are a higher risk and potentially higher return play and investors with such a risk appetite can look for success here. However, these need deeper primary research as firms are not very good at communicating their story and progress, and may even be secretive.

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• JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
• Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logos / brand name –