Investing.com — India’s mid-cap and small-cap outperformance against large caps over the past two years has valuation gap at historical high, UBS said signalling a potential correction in the near term.
The divergence in performance between the Nifty Midcap 100 and the Nifty 50 indices has reached unprecedented levels, driven largely by re-ratings in fiscal 2023-24.
“Based on past cycles we believe a SMID correction is long overdue,” the note said, drawing parallels to the correction seen in 2018-19.
Around 80% of the 20 SMID-heavy sectors UBS tracks, including chemicals, home improvement, and exchanges, are trading at or above their three-year average multiples.
UBS says top-down value strategies are challenging in the current environment, but selective bottom-up ideas with strong fundamentals could still offer opportunities.
UBS expects significant growth in Delhivery Ltd’s (NS:) express and part truck load businesses,…
