Are Midcaps and smallcaps bottom out ?

Hello Dear Readers,

Happy Maha-Shivratri from STOCK TIGERS.

Today we will discuss most talk of the town topic.
Will My portfolio down more ?
Can i add and average my stocks ?
Can my stocks will regain its original highs ?
Will my stocks give me profit ?

Many retail investors, Long term Investor's portfolio shown big dent in 2018.

Many of their investment became 30-40% down, and many of the investors still not confirmed that this is bottom or not.. They are still afraid that stock will fall again.

According to a Financial Express report, Nifty Midcap has lost 15.8% in 2018 so far, leaving investors with fairly large losses. “Some 33 of the stocks have lost 25% each since the beginning of the current calendar year, with Vakrangee and PC Jeweller plunging as much as 88% and 80.5%, respectively. Interestingly, of the 135 trading sessions so far this year, 75 days saw the midcap gauge closing in the red,” the Financial Express report added.

Fall of these stocks are of due to many factors.
Like,

• Mutual Fund re-classification
• Revised ASM & GSM Norms
• Some corporate governance issue.
• Election fever
• High valuations
• Rupee depreciation

Also with the following reasons, some more Largecap Stocks like YES Bank, DHFL, Jet Airways ruined investors sentiment in smallcap and midcap stocks.

Are Midcap and Smallcap stocks Bottom out ? 

As per our study , i think midcap and smallcaps are Bottom out. To understand the idea, Let us check some index charts

(Nifty Midcap 50)

Chart 1 represents Nifty Midcap 50 index.This index shown 52 week low in October 2018 at around 4300. Than after index is rising slowly and now reached around 4700. which shown around 10% rise in Index.

By Analysing Technical chart of Nifty Midcap 50 index, there will be probable Breakout above 4750. Midcap index have taken Trendline support and bounce back.

(Nifty Midcap 100)

By Analysing Technical chart of Nifty Midcap 100, there will be probable Breakout above 16950,index have taken Trendline support and bounce back.

This index shown 52 week low in October 2018 at around 15800. Than after index is rising slowly and now reached around  16900. which shown around 8% rise in Index.

( CNX Smallcap)

This index shown 52 week low in February 2019  around 13100. Than after index is rising slowly and now reached around 13900. which shown around 5% rise in Index within 15 days.

By Analysing Technical chart of CNX Smallcap Index , There is already breakout of Falling wedge. RSI also positive and shown divergence and breakout.

( CNX Smallcap Weekly chart)

What Should Investors do now ?

We believe that both SMALLCAP & MIDCAP Index bottom out. There is very limited or NIL downside on the Index. Midcap 50 and Midcap 100 include almost majority of stocks. SMALLCAP index also shown Breakout and gaining slowly upward movement.

This market correction should be taken as opportunity to add on to the existing position with an aim to average the cost of purchase. 

Time to move from under performing stocks to best performing stocks.

We believe mutual funds investing in mid-cap and small-cap stocks primarily follow the bottom-up approach. From this perspective, the recent sell-off can actually provide decent opportunities to add.

Fresh rally of new FII, DII and MF investment can be seen after 2019 Election result.

STOCK TIGERS VERDICT :-

• SIT TIGHT WITH YOUR INVESTMENT STRATEGY 

• ADD/AVERAGE YOUR CURRENT POSITION.

• FOLLOW STRICT INVESTMENT FORMULA.

• SLOWLY ADD FUNDAMENTALLY STRONG STOCKS FOR 40-50% GAIN IN FY19.

• WE WILL SLOWLY UPDATE OUR BLOG WITH FUNDAMENTALLY & TECHNICALLY STRONG