Mid-cap and small-cap stocks in India surging past large caps, UBS predicts potential correction.

From Investing.com: 2025-01-12 05:30:00

India’s mid-cap and small-cap stocks have surged past large caps, leading to historically high valuation gaps, prompting UBS to predict a potential correction. The Nifty Midcap 100 outperforming the Nifty 50 has triggered concerns of an overdue correction, with 80% of SMID-heavy sectors trading well above average multiples.

UBS recommends selective bottom-up investment strategies amidst challenging market conditions. Delhivery Ltd is expected to see significant growth in express and part truck load businesses, with a buy rating and a target price of 525 rupees, implying a 57% upside potential. Indian Energy Exchange Ltd and Multi Commodity Exchange of India Ltd also show promise with buy ratings.

Navin Fluorine International Ltd, Ramkrishna Forgings Ltd, and Shyam Metalics and Energy Ltd are all rated buy with significant upside potentials. Navin Fluorine is expected to benefit from capacity expansion in specialty fluorochemicals, while Ramkrishna Forgings is optimistic about revenue visibility from railway orders. Shyam Metalics is diversifying into battery-grade aluminum foil and may benefit from potential anti-dumping duties on Chinese imports.



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