Recent Corrections In Mid Caps Make Them Attractive Buys, Manish Sonthalia Says

Select mid-cap stocks are looking attractive after the recent correction, according to Manish Sonthalia of Motilal Oswal Asset Management Co Ltd.

The recent mutual fund reclassification guidelines by the Securities and Exchange Board of India is actually exaggerating the fall in many of the small- and mid-cap names, Sonthalia, director and chief investment officer at India Zen Fund, and head of equities-portfolio management services at Motilal Oswal Asset Management, told BloombergQuint in an interview.

“Sixty percent of the mid-cap stocks have lost more than 20 percent,” Sonthalia said. There is no doubt that there is value in mid caps today as opposed to what it was lets say a year back or two years back, he added.

Here are some of key highlights from the conversation:

• No major disappointment in March quarter earnings except for corporate banks.
• If oil moves to $70/bbl, then Nifty could cross 12,000.
• See limited room for rupee to fall from current levels.
• Status quo by RBI likely in June meeting.
• Expect RBI to hike rates by around 50 basis points over the next 12 months.
• No negative surprises likely if RBI hikes rates in June meeting.
• Consumer staples remain a favourite for the next one year.
• Will require too much of courage to build positions in public sector banks at current levels.
• Seeing shift from public sector banks to private sector banks and non-banking finance companies.
• Would focus on retail lenders compared to corporate lenders.