Brokers watch their screens during trading hours inside a dealing room at a bank in Mumbai, India. (Photographer: Abhijit Bhatlekar/Bloomberg News)

Why Motilal Oswal Thinks It’s A Good Time To Buy Mid- And Small-Cap Stocks

There is more margin of safety in the mid- and small-cap stocks as opposed to the large caps right now. That’s according to Manish Sonthalia, head of equities at India’s largest wealth manager Motilal Oswal AMC.

The massive buying that’s happened in the large caps means they may go through a period of time correction. The selling in mid-cap and small-cap stocks is overdone.

The S&P BSE MidCap Index has fallen 13 percent so far this year, compared with a 7.8 percent rise in the larger-sized S&P BSE Sensex. The S&P SmallCap index has fared worse, falling over 16 percent in the same period.

Sonthalia said investors should focus on building a portfolio of mid-cap or small-cap stocks with a two- to three-year perspective.

“If one needs to have a serious alpha in their portfolio, they need to be in the midcap or small cap space.”

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