These midcap stocks with ‘strong buy’ & ‘buy’ recos can rally over 15%, according to analysts

When valuations are high but sentiments are bullish, it would be better to add the word “ caution” to your portfolio. Now how does one do it ? By putting some quantitative parameters when making a decision to buy a stock. Refinitiv’s Stock Report Plus which lists stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy .

One segment of the market which got another big push in the market after the election results have come has been the mid-cap segment. Both at the index land and breadth level mid-cap which were already out-performing got a push. While there is nothing wrong in being bullish given the fact that policy continuity is the next theme on the street. However, keep some check and balance while participating in this phase of the rally. The reason is the valuations are not cheap and any small profit booking correction may lead to sharp correction in individual stock prices. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

The way mid-cap stocks have performed in the last few days, it appears that a rotational correction is taking place. The only solace is that the street is rewarding the stock if there is any positive development which indicates that there is still fresh money which is on the sideline which moves into those stocks. But on the other hand, on a day when there is any correction, the cuts are sharper and market breadth turns extremely negative. For investors who have high exposure to mid-cap space, there is one key indicator to watch is FPI flows. But in this time also the analysts are bullish in select midcap stocks from different sectors. ET screener powered by Refinitiv’s Stock Report Plus lists down quality stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy . This predefined screener is only available to ET Prime users.

Many investors, especially the ones sitting on cash, get confused about what they should do in the market when the nifty starts to rally and is not far from its all time high. Should they – buy or wait for a correction, the answer lies in looking at fundamentals. Refinitiv’s Stock Report Plus which lists stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy .

Recency basis, getting impacted by what has happened recently and over relating it with what may happen in near future is something which probably is happening in midcap cap space. In such times, it would be better that investors should be cautious in selecting the stocks, better to go with buying in smaller quantities and keep some cash allocated for the stocks, but only to be used on the day when there is absolutely chaos on the street. Refinitiv’s Stock Report Plus which lists stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy .

It is after a long period of time, that mid-cap stocks have seen some correction. All those investors who have high exposure to mid-caps in their portfolio have probably gone through two different emotions. Should I sell? Should I buy more? For all those who have gone through these emotions. Let the market be volatile, don't make volatile decisions. Corrections are part of any market and especially when valuations are high, the frequency and magnitude of correction will be higher. For all those who are looking to deploy more money and are focussed on mid caps, it would be better to put more checks and balances, both qualitative and quantitative and be selective in buying stocks. More importantly, even after putting in all the efforts of checks and balances, be ready to see a short term drawn down in the value of your portfolio, because if there is a deep correction in the markets, mid-cap stocks tend to shed more weight.