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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.”

Ambit Capital Says Time To Buy Small- And Mid-Cap Stocks Is Now

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.

Also read: BJP Win A Positive, Boosts Modi’s Chances Of Victory In 2019, Say Market Experts 

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.

Also read: Karnataka Election: Karnataka Cliffhanger Now Hinges On Governor’s Decision