Speculation on election results has made the Indian stock markets jittery, a consequent market crash is seen as a good opportunity for retail investors to buy some fundamentally sound small cap stocks with a little higher risk appetite.
According to market watchers, retail investors who have missed the bus in the bear market rally since last 45 days, small cap stocks can cushion their equity portfolio, already battered by the global meltdown. They can expect a return 35-50 per cent in 3-8 months span assuming that the worst is over.
Zuari Industries, Sterlite Technologies, Amara Raja Batteries, Bharat Bijlee, Hyderabad Industries, Sangvi Movers, Yes Bank, IndusInd Bank, Welspun Gujarat, Sesa Goa, Hind Zinc, Varun Shipyard, Renuka Sugar, Kalpataru Energy are some fundamentally sound small caps recommended by experts who believe that these stocks are available at an attractive price.
In the recent bear market rally, most of the large cap stocks have already moved up considerably. After the fall of market on the back of election, we expect a gradually recovery unless there is no unexpected global cue. Hence, investment in small caps with good potential coupled with positive sectoral outlook does make sense to book short term profit.
Echoing similar views, Alex Mathew, head – equity research, Geojit BNP Paribas, said: “The worst is over! We are inching ahead towards recovery wherein certain sectors like banking, metal and shipping industry will rise first. B group small cap stocks can well be the focus in that recovery.”
Small and Mid cap stocks are said to be "high risk - high return" bets and those who have appetite to go for risk rewards, they should bet with 80:20 ratio for small mid cap versus blue chips or large caps, feels Dillip Davada, an independent Mumbai based stock analyst.
Market men are of opinion that BSE Sensex which hovers around 12,000 points could come down between 9,000 and 10,000 level over horse trading uncertainly to be prevailed upon after election results to form the new government. Similarly, 50–share Nifty finds a support at 3,300 level. Equity indices may breach these levels, if there is a strong emergence of Left supported Third Front, which is unlikely according to them.
However, a section of market men do not rule out chances of re-election in the worst scenario wherein both the UPA and NDA does not reach 200 mark each.
Source & Ref: EconomicTimes
