11 midcaps fall 30-80% in 2018;master say limit your subjection to 30%
In 2018, 75 percent stocks in the BSE Midcap index delivered negative returns
It looks like the age-old saying, ‘sell in May and go away’ might be coming true not just for May but for 2018. The BSE Midcap index and BSE Smallcap index has plunged over 12 percent and 14 percent in 2018, respectively.
Both small and midcap indices produced many multi-bagger stocks in 2017 but the New Year has started with its own set of challenges for the broader market. Market experts advise investors to stick to quality and limit their small and midcap exposure to 20-30 percent of their portfolio.
In 2018, 75 percent stocks in the BSE Midcap index delivered negative returns. These include: Vakrangee (down 87 percent), Reliance Communications (down 57 percent), Adani Power (down 49 percent), Bank of India (down 45 percent) and Union Bank of India (down 42 percent).
The remaining stocks that managed to buck the trend include: Mphasis (up 54 percent), L&T Infotech (up 37 percent), Gruh Finance (up 34 percent), Ashok Leyland (up 24 percent) and Biocon (up 20 percent).
There are plenty of factors which have plagued the midcap space: high valuations, falling rupee versus the dollar, persistent selling by foreign investors, earnings failing to pick up as well as classification of mutual funds by the Securities and Exchange Board of India (Sebi) led to some shuffle in mutual fund portfolios.
The midcap and smallcap indices are quoting at an astronomically high price-to-earnings (P/E) ratio. On a trailing basis, the midcap index was at 50 times and smallcap index was at 100 times, which is not sustainable in a difficult macro environment,
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