Worldwide economies are facing a shortage of liquidity. Midcap stocks are usually among the worst affected when liquidity dries up. Closer home, Indian economy is largely driven by domestic consumption (67% of GDP) and infrastructure and is expected to be more resilient than other emerging economies. While the tighter monetary conditions prevailing currently would moderate growth in the near term, economy is expected to do well over medium to long-term as RBI moves to easing mode. The macro economic environment & the growth would be supported by declining commodity prices and peaking out of interest rates would further help. Once the temporary turmoil subsides Indian economy will be among first to recover. Coordinated policy action by central banks and governments across the globe would also help. Valuations have compressed significantly and present an attractive investment opportunity in terms of risk and return trade-off. Mid cap companies have better growth opportunities as compared to larger companies within the respective sectors. We therefore believe mid cap companies will outperform broader market over medium to long term. Also, to benefit from short-term volatility of markets, SIP/STP is the preferred way of investing. |
