It is time to invest and not to book profits. Investors who missed the bus in the year 2017 should go shopping in the year 2018. Largecaps are expected to outperform this year compared to small and midcaps stocks.

The S&P BSE Sensex which rallied by about 29 percent in the year 2017 and was hitting record highs just a month back wiped out entire gains made in the year 2018 weighed down by both global as well as domestic factors.

The S&P BSE Sensex closed at 34,056 on 29th December 2017 and on 5th March 2018, the index recorded a level of 33,746 which translates into a decline of 310 points or nearly 1 percent.

The fall in the markets was led by a fierce sell-off in high beta names (S&P BSE 500 index) such as Gitanjali Gems, Omkar Specility Chemicals, BL Kashyap, Jaiprakash Power Ventures, RattanIndia Infrastructure, JBF Industries, Allahabad Bank, MMTC, Hindustan Copper, Supreme Infrastructure Ltd etc. among others.

However, in the S&P BSE 500 index there are many stocks which rose up to 80 percent in the same period which include names like Infinite Computer (up 80%), Excel Corp (up 69%), MindTree (up 40%), Venky’s India (up 40%), Nelco (up 38%), and NIIT Tech (up 35%).

There are many factors which are weighing on Indian equity markets and it is unlikely to be a one-way move by D-Street in the year 2018.

On the global front, sharp selling by the foreign institutional investors and fears of more than 3 rate hikes by the US Federal Reserve are weighing on the sentiment of investors not just in India but across the globe.

“The recent US macroeconomic data which is released over last few weeks be it inflation, non-farm payrolls, PMI Numbers, and jobless claims signals the pickup of the US economy at much rapid pace than expected and even the US Fed confirms the same,” JK Jain, Head of Equity Research at Karvy Stock Broking told Moneycontrol.

“The US Central Bank is now getting prepared to hike rates at least 3 times this year which is making equities as an asset class to lose its sheen,” he said.

On the domestic front, the Nirav Modi-PNB saga continues and is getting murkier by the day. After PSU banks top brass of the private sector banks was called in by the SFIO for questioning.

The macro data continues to remain weak but analysts are not losing hope on the ongoing bull run. Corrections are part of every bull run and long-term investors should use the opportunity to buy into quality stocks on every decline.

It is time to invest and not to book profits. Investors who missed the bus in the year 2017 should go shopping in the year 2018. Largecaps are expected to outperform this year compared to small and midcaps stocks.

Midcap and Smallcap indices have been hit the hardest post-budget correcting in excess of 6 percent each at the index level. However, following this sharp correction they have cooled off from overbought territory but are still selective buys because valuation is a big concern.

source: moneycontrol.com