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Watch out for smallcaps and midcaps

Since past few months the small caps and mid cap funds have by and large outperformed the large cap funds by a substantial margin and this category of small caps and mid caps have returned 27.5% in the past few months as compared to 11.4% by large cap funds during the same period.

However the market is  already betting on a strong government at the center .As there is not much of upside left so it makes a bit sense to book some profit in the mid cap funds .which have run up in a short period of time .Some mid caps have performed well enough 30% to 100 % .

Earlier the stock prices of the mid sized companies with good balance sheets started rising and so started their upward journey and a few months ago as such since the past few years have been in the doldrums .as the mid sized companies started rising and later became broad based as the sentiments have turned out to be positive for the segment due to the positive outcome of a stable government of India .

Moreover the companies have not grown in profits in the lines with the stock prices especially in the sectors like infrastructures, automobiles and capital goods .

Since the mid caps were available at cheap prices just a year ago and the current out performance by mid caps show that they are only catching up quickly with the large cap stocks in these times when India is headed for the elections  .