Ambit Capital Says Time To Buy Small- And Mid-Cap Stocks Is Now
If you’re looking to buy small- and mid-cap stocks, now is a great time.
That’s according to Gaurav Mehta, fund manager for Ambit Capital Management, who recommends long-term investors buy these stocks as he expects the current volatility in the market to be short-lived.
Mehta said the market is near the end of a mid-cap correction. “What you’re seeing today is a bit of volatility, which has been prevalent in broader markets anyway. This, however, is a short-lived phenomenon as the economy and corporate earnings are picking up.”
The S&P BSE SmallCap Index is down 4.7 percent while the S&P BSE MidCap Index has fallen over 5.5 percent so far this month. This compares with the near one percent gain in the S&P BSE Sensex Index during the same period.
The weakness in stocks is mainly because of profit-booking, realignment in mutual fund investments and the political uncertainty in Karnataka. Global markets have also not been supportive due to a rout in U.S. bond yields, Mehta told BloombergQuint in an interview.
Karnataka is in the middle of a standoff between the Bharatiya Janata Party, which emerged as the single-largest party, and an alliance betweenthe Indian national Congress and the Janata Dal (Secular). Both the NSE Nifty 50 Index and the S&P BSE Sensex have declined close to 0.6 percent since yesterday.
“The market was looking to see if the BJP can still be the single-largest party as an indicator of the upcoming general elections in 2019,” Mehta said. “The specifics of who will form the government will be irrelevant.”
Watch the interview here.