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What To Do With Mid and Small Cap Stocks If They Have Given Amazing Returns

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This post was sent via newsletter to my email subscribers on Mar 14, 2024.

I think you already know why the markets are crashing. So I will not write much about it. If you do not know it’s because The Securities and Exchange Board of India (Sebi) chairperson, Madhabi Puri Buch, on Monday (11-Mar-2024) raised concerns over stretched valuations of small- and mid-cap stocks, which are mainly bought by retail investors. Since Jan 22. You can read more here:

Let’s look at the returns.

In the Equity: Small Cap sector in the mutual funds the highest 1-year return as of 12-Mar-2024 is 64.42% (Bandhan Small Cap Fund – Direct Plan)

In the Equity: Mid-Cap sector in the mutual funds the highest 1-year return as of 12-Mar-2024 is 63.58% (Edelweiss Nifty Midcap150 Momentum 50 Index Fund – Direct Plan)

Yes, such returns will not come year-on-year, correction is due anytime or stagnancy will be long – very long.

No, I am not recommending the above funds. It is just data which I had to use in this email. Whether to invest in these funds or not is your decision. Whatever you do – never invest a lumpsum amount. Always do a monthly SIP (not daily and not quarterly). Monthly SIPs are manageable and get the best rupee cost averaging.

WHAT YOU CAN DO IF INVESTED IN SMALL AND MID-CAP STOCKS?

The real reason to write this email is to inform you that if you are heavily invested in small and mid-size companies and if they have generated more than 50% return in the last year – then book some profit.

If you bought the stocks to invest for a long time – I would still recommend booking profit in at least 30% of the stocks. If you bought them for the short term in mind then it’s time to exit and book full profit.

One stock that may give good returns is ITC in the short term.

Why?

ITC shares were yesterday bought by ICICI Pru MF, Government of Singapore, Nippon India MF, DSP MF, SBI MF, Max Life Insurance Company and Kotak Mahindra MF offloaded by BAT.

Disclaimer: Not an advisory – please take your own decision before buying. Full disclaimer here.




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Open ZERO Brokerage FREE Share Trading Account - Buy and Sell Stocks Without Brokerage - Set GTT (Good Till Triggered) Orders on System and Forget

Traditional brokers charge a lot for brokerage; however, this broker does not charge anything for stock buying and selling. Also, you can set GTT (Good Till Triggered) order after buying a stock, so that the system can sell the stock automatically at your target price even if you are not monitoring the market. Only 25k is blocked for option selling with hedge. Also, you get a lifetime free account in Sensibull (virtual trading app & strategy builder) which charges Rs.800/-+GST a month. It takes 5 minutes to open an account online. Click here and Open Free Account with Them Today >>

About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

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