Investors must be cautious about mid-cap stocks as they are still trading at a premium to large caps despite the recent correction.
That’s according to Citi India. Mid caps have outperformed large caps over the past three years. The trend got reversed this year.
The brokerage now advises clients to focus on large caps. “Stay selective, given sustained FII (foreign institutional investor) outflow pressures, premium valuations and worsening domestic macro,” Surendra Goyal, the managing director and head of India research at Citi, wrote in a note to clients. “Market fundamentals look entirely dependent on domestic inflows unless earnings trajectory shifts.”
