Mid and small caps correction led by selling from leverage-based retail investors
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After touching a new high, the domestic market witnessed a correction due to concerns over the broader market valuation and increase in volatility, says Vinod Nair, Head of Research, Geojit Financial Services.
The unfavourable risk-reward balance of mid- and small-cap stocks, fuelled by prolonged premium valuations, has aggravated the downfall. Mid and small caps corrected led by selling from leverage-based retail investors, he said.
"We expect bargain opportunities to persist in mid- and small-cap stocks whose valuations are supported by fundamentals. Meanwhile, FMCG and contrarian plays like gold are offering some refuge," he added.
The week ahead, the global central bank's monetary policy decision will get investors' attention. The US FED, BOJ, and BOE will unveil their rate decisions. There is uncertainty over FED rate cuts due to an increase in the US unemployment rate and higher than expected US inflation.
Consequently, the US 10-year yield and dollar index inched higher, and the repercussions were visible in the emerging markets as well, he added.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said next week will be important from an economic perspective as major central banks globally including Japan, the US, and the UK will announce interest rate decisions.
US Fed policy outcome and commentary will be important as mixed set macro data has kept investors anxious over rate cut timeline.
"Thus, we expect the market to remain volatile in the near term with a focus on large caps and defensive names," he added.
