What Is Intraday Trading?

The rate of progress in AI has been very irregular and unpredictable. The global artificial intelligence market size was projected at USD 39.9 billion in 2019 and is expected to reach USD 62.3 billion in 2020, is probably to grow at a compound annual growth rate of 42.2% from 2020 to 2027 to reach USD 733.6 billion by 2027. Organizations are implementing AI for varied business applications.

The technology provides real-time data gathering, forecasting, and analysis for delivering greater insight in industry verticals, like automotive, healthcare, retail, finance, and manufacturing.

The banking, financial services and insurance industry have undergone a dynamic transformation because the industry requires improvement in areas like fraud detection, wealth management and insurance processing.

By implementing AI BFSI firms can meet strategic objectives like improving customer experience, cost and efficiency optimization, delivering personalized services and improving speed-to-market for offerings.

The manufacturing industry deals with vast quantities of knowledge due to the utilization of sensors and networks,93% of companies believes AI is going to be an essential technology so as to drive growth and innovation within the sector.

87% of manufacturers have adopted AI or planned while 83% hold that AI will make a tangible impact on manufacturing and management within the following 5 years.

Insights:

Software led the synthetic intelligence market and accounted for quite a 39.0% share of the worldwide revenue in 2019, due to prudent improvements in information storage capacity, high computing power, and multiprocessing capabilities to deliver high-end AI software in dynamic end-use verticals.

Technology:

Machine learning and Deep learning has led the market and accounted for quite a 39.0% share of the worldwide revenue in 2019, due to its complicated data-driven applications, including text/content or speech recognition.

As an example, in March 2018, NVIDIA Corporation announced a strategic partnership with Arm Limited to bring deep learning inference to the web of Things (IoT) and consumer electronics devices within the global marketplace.

End-Use:

The advertising and media segment led the market and accounted for quite a 20.0% share of the worldwide revenue in 2019. The healthcare sector is gaining a number one share supported use-cases, like robot-assisted surgery, dosage error reduction, and automatic image diagnosis. The BFSI segment includes financial analysis, risk assessment, and investment/portfolio management solicitations.

Regional:

North America dominated the AI market and accounted for over 42.0% share of worldwide revenue in 2019. This is often due to the presence of leading players within the region, a strong technical adoption base, and the availability of state funding. The Asia Pacific is estimated to witness significant growth in the market for artificial intelligence.

Key Companies & Market Share:

In September 2019, IBM Watson Health signed an agreement with Guerbet, for the event of an AI software solution for cancer diagnostics and monitoring. Moreover, in January 2019, Intel Corporation announced its partnership with Alibaba Group Holding Limited (China), to co-develop AI-powered tracking technology to be deployed at the Olympic Games 2020.

Some key players operating within the AI market include Atom wise, Inc.; Life graph; Sense.ly, Inc.; Zebra Medical Vision, Inc.; Baidu, Inc, Google LLC; Intel Corporation; and Microsoft Corporation etc.

The Strategic Acquisition of startups is the Key Strategy to expand globally for the Key Players:

Globally there is a trend of startups growing in the market. Hence key players are taking several strategic initiatives, such as mergers and acquisitions, partnerships, and collaborations with other major companies so as to offer customized artificial intelligence solutions to fulfil the rising needs of the industries and to expand globally in order to enhance their offerings these players are acquiring startups.

Investments that are rising in research and development by leading players also will play an important role in increasing the uptake of AI technologies.

For example, the Chinese tech giant Alibaba's research institute Damo Academy has developed a diagnostic algorithm that can detect new coronavirus cases with the chest computed tomography (CT) scan. The AI model utilized in the system has been trained with the sample data from over 5,000 positive coronavirus cases.

In December 2019, Intel Corporation has completed the acquisition of Habana Labs Ltd., an Israel-based deep learning company. This acquisition is estimated to strengthen Intel Corporation’s AI portfolio and encourage its efforts within the AI silicon market.

The retail industry is expected to grow significantly: the expectation is that 80% of executives will adopt AI-powered intelligent automation. It is because of customer changing habits. Artificial intelligence technology in retail offers various benefits such as predictive merchandising, programmatic advertising, market forecasting, in-store visual monitoring & surveillance, and location-based marketing.

Ease of Deployment:

This is likely to boost cloud adoption. On-premises has led to gain maximum shares. Owing to less implementation expense cloud deployment is gaining traction. Eg is amazon which offers easy image recognition, chatbots, etc. so cloud deployment would be in demand in few years.

Use of machine learning, NLP and computer vision: machine learning is gaining popularity because of precision in analysis. Which the increasing application for chatbots and virtual assistant is boosting demand for NLP technology. Ml technology is required mostly in healthcare sectors computer vision is another one.

The fusion of air and cloud computing can help to grow market segments. Companies with fewer funds can rely on cloud computing for the services. For eg.veritone has use cloud computing for building it AI operating system. Startups are using fusion to expand globally.

Increasing use of AI will increase chances in the service market: three components of the market are taken into account they are: hardware, services and AI software. Hardware will grow because of semiconductor companies.

Enterprises will be enabled to increase the use of AI of network optimization to optimize their inventory by making orders that supported the estimated demand, current inventory level, and time interval.

Al can help telecom providers to create self-optimizing networks (SONs), which may provide network operators with the power to automatically optimize their network quality counting on traffic information by zone and region. Poor availability of skilled workforce and high cost of implementing AI.

A major challenge for the expansion of Al within the telecommunication industry is that the shortage of technical expertise among the workforce.

Enterprises implementing Al are required to possess sound knowledge on working with Al software platforms and periodic servicing necessities to make sure smooth operations.

Consumer stocks remained in demand by many investors. As per the retail sales figure data, it was reported that the retail sales surged by 9% in March, which is the highest percentage in 10 months.

It is said that for the first time unemployment benefits were at the lowest levels. Experiencing all the things above, we consider the top consumer stocks being the most active today.

Before getting deeper into the consumer stocks, let’s take it at a glance.

What are Consumer Stocks?

Consumer stocks are basically a sector of stocks that includes companies that produce consumer staples.

Nowadays, every individual depends on consumer staples. This includes all the products that we use on a day to day life such as food, beverages, cleaning products, personal hygiene.

As these goods are used in day to day lives, these are purchased irrespective of the economic condition of the country. Because they are considered as the essential items.

There are different forms of consumer stocks. One form of the consumer is discretionary stocks.

These include hotels, apparels, restaurants etc. While normal consumer stocks provide essentials that are connected with the daily activities of an individual, the latter do not provide essential goods.

Instead, they offer services for consumer’s requirements rather than what they want.

Investor’s Attention to These Stocks

Investors are now paying attention to these stocks. If we take a look at the stock market, then the first quarter of the 2021 earnings season seems to be picking up speed. Stocks like HUL, ITC and Nestle have shown growth.

Investors focus on these stocks particularly because of the reason that they deal in essentials. The Covid-19 pandemic has not gone completely and hence investors prefer these consumer stocks which will not show a deep fall even if the situation gets worsened.

Overall, we find that investors are seeking to invest in consumer stocks as they are high in demand these days.

Benefits of Investing in Consumer Stocks

When it comes to investing in stocks, one of the main concerns that arrive in everyone’s mind would be the stability stocks hold during economic crises.

When it comes to consumer stocks, they are considered the safest instruments for investors as these essentials never go out of need. The demand for these goods rises during a time of crises.

Also, due to heavy demand by consumers, these companies generate consistent profits even in the time of weak economic conditions.

Another benefit of investing in such stocks is: these consumer stocks pay dividends to the stockholders. They are defensive enough to outperform other stocks even during bear markets. This is mainly due to the essential nature of consumer stocks.

For example, in the recent time of pandemic, numerous consumer stocks thrive as consumers tend to stock up on essentials.

This in return, increases the valuation of companies producing consumer products and provides investors with attractive returns.

Last but not the least, another major advantage of having such stocks is their stable revenues irrespective of the economic condition and challenges.

Here are the best consumer stocks that you should never miss in 2021

1. HUL (Hindustan Unilever Limited)

HUL is the top giant and currently considered the leading company in the consumer goods market. With its great and outstanding financial performance over the last years, the company’s stocks still provide attractive returns to its shareholders.

Last month i.e in March, the company had recorded a 52 week high of Rs Rs 2614.30 and the lowest being Rs 1750. If we talk about the market size of HUL, then it is Rs 5,08,113.69 crore that proves the company can provide huge earnings to its shareholders in the future.

2. ITC (Indian Tobacco Company)

ITC is a renowned name in the FMCG sector in India. It’s a well-reputed tobacco company that diversified into different sectors including FMCG, paperboards, printing, personal care products, hotels, commodities, ghee, luxury chocolates, frozen food products and many more.

The company provides a huge dividend to its shareholders. The dividend yield of ITC is 4.33% and also holds liquid cash and liquid investment of Rs 35,600 Crores.

According to sources, ITC gains 62% of its revenue from the tobacco business with hotels providing the least of its revenue of 3.88%

3. Nestle India Limited

Nestle is an Indian subsidiary of the swiss based MNC. Bagged the third position after ITC, the company has a market capitalisation of Rs 1,59,155,52 Crores. Of total capitalisation, 40% of its revenue is generated from milk, followed by beverages which are 12%, 28% from dishes and the remaining 13% from chocolates and confectionaries.

Investors should not miss out on investing in Nestle as the company hits a high at Rs 18.369.95 and the lowest at Rs 12,200 over a span of 52 weeks.

From the above points, Nestle has turned out to be a smart investment choice.

4. Britannia

Britannia is considered one of the oldest and top leaders of biscuit companies in India. It is also referred to as the powerhouse of the consumer goods sector. The company has a total of 21.7 lakh outlets in the country. If we talk about the popular brands of Britannia which are the first choice of every individual is Tiger, Good day, Nutri Choice, Milk Bikis and Amrie.

Investors also need to focus on Britannia as the company’s sales have grown at a CAGR of 8.10% and the PAT has grown at a CAGR of 20%.

The company recorded a 52 week high of Rs 4010.00 and 52 week low being Rs 21,00.

The market capitalisation of the company is Rs 89,582.63 Crores.

5. Godrej Consumers Product Limited

The company is the market leader in hair color and other segments. The company has recorded a 52 week high of Rs722.0 and a low at Rs 425.10. Godrej has a market capitalisation of Rs 66,624.36 Crore.

Another advantage of investing in Godrej stock is that the company also offers a dividend of 1.15% which is quite good as compared to the other investors.

The Bottom Line

Needless to say, consumer stocks perform best irrespective of the economic cycle and hence it would be ideal if you invest in these stocks. The companies are the top leaders in the FMCG sector and that's the reason they never dissatisfy their customers.

The stock market offers various trading platforms for investors to trade in the stocks without any hassle. This is the place where individuals invest their funds for the long term. However, there are other traders too, who enter these markets with the purpose of making small quick profits by trading for minutes or hours.

These traders are known as scalpers, who believe in making immediate profits rather than waiting for the long term.

Before getting a dig deep into this, let’s understand how scalping can be used to collect huge profits through small trading techniques.

What is Scalping?

If you have heard the name scalping, you would be wondering what these scalpers are and how they achieve profits from the deal.

Scalping is a short term trading strategy used to achieve profit from the volumes of trade placed, rather than focus on maximizing capital gains on each trade.

These are short trading styles predominantly used in intraday trading. Scalpers trade frequently and in small trading sessions.

The name scalping got famous due to the traders who adopt such styles - they quickly enter and exit from the market by making small profits from a large number of trades, throughout the day trading.

A scalp trader usually follows a strict exit policy as one huge loss could eliminate all the profits made throughout the day. Therefore this trading style requires discipline, stamina and decisiveness.

If one possesses these qualities with the right strategy, he/she can become a successful scalp trader.

Scalp traders often enjoy the trading style that it requires. However, to achieve successful deals, you are required to execute numerous technical trading techniques to identify profit opportunities in the market.

How Does Scalping Work?

Before answering the question, how does scalping work, lets understand the trading mechanism of scalping.

Scalp trading is a short term trading style that includes buying and selling of assets multiple times to book profit. Trading multiple times allows a trader to earn from the price difference.

It involves buying an asset at a lower price and selling at a high or vice versa.

Scalpers mostly try to find out the highly liquid assets that are volatile in nature i.e. these assets do frequent price changes during the day trading. Do remember, for scalping, it is highly important for an asset to be liquid, only then will you book profits throughout the day or otherwise you may face huge losses.

Scalpers believe it is easier to make money through small deals because it is less risky from the market volatility perspective.

There are other traders too, who hold onto their position for some weeks or months for making a huge profit. However, scalpers believe in making multiple profit opportunities within a small span than the bigger one.

Here some principles of scalping that every trader needs to follow:

Make Small Moves:

Small moves are easier to obtain than large moves. For making a huge profit, the stock market has to be insatiable i.e. it requires a high imbalance between supply and demand. In such situations, small prices are comfortable to deal with.

Small Moves happen Frequently:

Small moves in the stock market always work the best. Even many experienced traders use small moves when they see the market is quiet for some time.

Lower exposure Limit Risks

A brief exposure in the market reduces the chances of running into an adverse condition.

Trading methods used by Scalpers

While other trading styles like position trading use fundamental analysis, scalp trading however depends on technical analysis. This is because technical analysis includes identifying the historical price movements of assets and comparing them with the current asset’s price. For this, scalpers use different charts and patterns.

The comparison of historical data with the current data helps scalpers observe patterns and predict future price movements with ease.

Scalpers use charts and patterns and observe them with a specific timeframe. In other words, they do analysis in small time frames which are the shortest of all trading styles.

An intraday trader uses five minutes or 10 minutes trading charts to make five deals a day. Scalpers, on the other hand, uses a time frame of 5 to 10 seconds to make 50 to 100 trades during the day.

Scalpers play smartly with the trading, also they use several market’s tactics to achieve a high speed of trading. Such tactics are the market’s time and sales - a record of buying, selling and cancelled transactions.

5 Scalping rules that are must be followed by Traders

Avoid Excessive Usage of Trading Indicators

Firstly, scalpers need to minimize the usage of multiple technical indicators. Trading indicators are basically the plotted lines on the price charts that help traders to identify whether to buy or sell assets.

Invest in Profitable Stocks

For a scalp trade, it would be beneficial if you invest in profitable stocks as it will help you achieve more profits throughout the day. Also, the quality number of trades in a single day makes your margin requirement and risks reduced.

Margin is the borrowed funds that brokers lend to the traders so that they can buy securities more than they afford.

Master Certain Strategies

As a scalp trader, it is important to master certain strategies that will give you bountiful benefits of profit booking. Traders apply multiple strategies which confuse them with which strategy should be used or which one is not?

For example; you made 10 trades and used various methods to execute them. Now you would get confused as to which strategy worked well for you? Therefore it would be ideal if you use 2 or 3 strategies and execute your trade order.

Selection of Preferred Market

Scalping is a short term strategy that is not limited to futures alone. In fact, you can use scalping trading in forex and stocks as well.

The preferred market for scalping are:

• Scalping for forex market
• Scalping for the futures market
• Scalping stocks

Minimizes Losses

Reducing losses is one of the most significant concerns a trader must pay attention to. A scalper trade in many traders in a single day. Some scalpers book huge profits from it where others suffer a loss. Therefore, a scalper needs to learn to cut down the losses in every losing trade to mark a good profit in scalping.

Conclusion

Scalping is a process where a trader uses short time frames, chart plans to book a profit throughout a day. Scalping is a difficult trading process that demands dedication, speed and discipline to execute scalp deals.

If you are an experienced trader who knows how to trade intraday and aims for short term trading, you can go for scalping trading. However, if you are not aware of intraday trading strategies and wants to invest in the long run, scalping is not your cup of tea. Choose wisely and execute your trades according to your trading styles.

The second wave of coronavirus seems to be very dangerous as it has badly hit the Indian economy. With new cases rising every day, state governments immediately came into action and imposed strict restrictions to curb the resurgence.

Although the curb is weaker than last year's pandemic, it somehow has started to affect several business activities.

Like last, the second wave of COVID 19 would heavily impact India’s Gross Domestic Product (GDP) growth in the coming months.

If we talk about business activities and the economy then the Indian stock market is also not untouched by this.

However, pessimism hasn't come up with the equity trading market so far. If you look at the last two month’s data, you will get to know that the NIFTY50 gets down by only 7% from its all-time high of 15,431.75.

Then what's the reason behind the market afloat?

Despite the critical situation across the country, analysts point towards the two factors that still maintain complacency in the stock market.

Several traders and expert analysts said that the global peers are doing well and that's the reason the Indian stock market trading is also performing well.

In other words, Global equity markets in the US have been in a good condition which is the main reason behind the drifts of the Indian stock market, The S&P 500, Dow Jones index touched an up of 4,195 and 34,200, this month.

It clearly shows that global equity markets are performing outstanding well and that makes a positive rub off on Indian equity markets as well.

As of now, we have not experienced a major decline in Indian equities despite having one of the highest infection rates in India - said Mr Sanjay Mookim, Research Head, JP Morgan Chase.

Besides, the hindsight of Indian investors makes the equity market more stable than before. The second wave reminds them of the mistakes they made in last year’s pandemic.

Therefore, they clearly say, even if the index goes down, they also go up. Also, last year, many fund managers made a huge mistake by selling a majority of stocks, this year they wouldn't.

Also, we have seen the equity market has bounced back from its position and hence the aggressive selling has not been done by many people, this time, Majoom said.

Naveen Kulkarni, CEO at Axis Securities Ltd, stated that “Prior experience shows how the stock market made a massive comeback post last year’s pandemic and therefore we don’t expect investors to offload equities hugely this year. This is because as the vaccination picks up the pace, the curve will flatten.

When a nationwide lockdown was announced in March 2020, the Nify50 went down by 13%. After 1 year, shares have grown up by double or sometimes even thrice. A recent analysis done by Mint report, in Nifty500 index, the stocks have shown the growth of more than 50% than last year and 247 stock’s price goes up by more than 100%, which is unbelievable and beyond the expectations of Indian investors.

Besides, the positive factors by global markets, RBI also put its eye on the Indian stock market. The monetary policy members of RBI still get worried about the economic growth. They are not in a favor of complete lockdown in the country.

Experiencing the rising cases of Covid positive, FIIs have sold equities worth $934 million so far this month.

What Should You Do?

Analysts suggest that your portfolio along with asset allocation tells your gain and loss. If you put loads of equity stocks in your portfolio, then it can also be quite risky as the stock market is seeing a bit of a downward trend. Therefore, it is suggested to add some growth stocks to your portfolio as it will minimize your risks.

Earnings Outlook

While the second wave of COVID poses challenges to the ongoing economic recovery, consumers and businesses have adapted to the new normal, and lockdowns are likely to be localised; hence, we do not expect this wave to derail the economy. Therefore, we don't expect any significant impact on aggregate earnings.

Amidst this second wave of the pandemic, some stocks are still performing exceptionally well. Here is a list of stocks to Bet Upon:

6 Economy-Related Stocks to Bet On

1. Divis Laboratories

Divis Laboratories is considered one of the leading manufacturers of Active Pharmaceutical ingredients (API) in the world. As per the reports, the company’s growth looks promising due to the diversification from China into other countries including India.

As many global players try to minimize the dependencies on China and prefer In dia, companies like Divis Laboratories remained well placed to capitalise on such opportunities.

Also, the company announced the construction of the Divis Unit-III Facility at Kakinada, East Godavari District, Andhra Pradesh.

2. CDSL

CDSL stands for Central Depository Service Limited. The company facilitates the transaction and holdings of securities in Demat form and settlement of trade which are executed on a stock exchange.

Other services include KYC services in respect of investors to capital market intermediaries, holding insurance policies in electronic form and other online services such as e-Locker, e-voting etc.

If we talk about the market share of CDSL, it has witnessed a massive growth from 14% in FY14 to 51% in FY2020 in the market share.

3. Dr. Reddy’s Laboratories

We can't ignore the performance of Dr Reddy’s Laboratories. Amidst the pandemic, the company has managed to generate revenue of Rs 4,930 Cr in FY21 which is up by 12%.

4. HDFC Bank

The bank’s strong fundamentals with good quarter to quarter growth makes HDFC one of the best choices among Indian retail investors. The company’s operating profit goes up by 22.83 per cent. Good revenues (up 29.10 %) and the approaching summer seasons are the good factors of this stock.

5. Havells India

The company gave a strong performance, with its operating profit going up by 22.83% whereas the revenues (29.10%) and profit (22.35%) also showed a positive side.

6. Voltas

Volta's growth in FY21 is also fascinating. Its operating profit (53.44% up), revenue (22.14% Up), gross profit (up 22.35%) and a reduction of interest expense make this stock is one of the highest-value stocks in the Indian stock market.

Investing wisely is key to building wealth over time, but one common question that many investors have is: "When is the best time to invest?" Understanding market timing can help you make informed decisions and potentially enhance your investment returns. In this blog, we'll break down what market timing is, why it's important, and how you can approach it in a simple and straightforward way.

What Is Market Timing?

Market timing refers to the strategy of making investment decisions based on predicting the future movements of the market. The goal is to buy low and sell high, or to avoid buying when you expect the market to fall. Essentially, it's about finding the optimal times to enter or exit investments to maximize profits or minimize losses.

Why Is Market Timing Important?

1. Maximize Returns: Investing at the right time can lead to higher returns. By buying assets when prices are low and selling when they are high, you can take advantage of market fluctuations.
2. Risk Management: Effective market timing can help you avoid periods of market downturns or volatility, protecting your investments from potential losses.
3. Capitalizing on Opportunities: Market timing allows you to capitalize on investment opportunities that may arise from economic events, corporate news, or other factors that influence asset prices.

The Challenges of Market Timing

While market timing sounds appealing, it comes with significant challenges:

1. Predicting the Market: Accurately predicting market movements is extremely difficult, even for experienced investors. Markets are influenced by countless factors, making it challenging to forecast their direction.
2. Emotional Decision-Making: Attempting to time the market can lead to emotional decision-making. Fear and greed can drive investors to make impulsive choices that may not be in their best interest.
3. Opportunity Costs: Waiting for the "perfect" time to invest can lead to missed opportunities. Even if you correctly predict a market decline, waiting to invest might result in missing out on long-term gains.

Strategies for Market Timing

While perfect market timing is elusive, you can use several strategies to improve your investment decisions:

1. Long-Term Investing: Focus on a long-term investment strategy rather than short-term market timing. Investing with a long-term perspective helps you ride out market volatility and benefit from the overall growth of your investments.
2. Trend Analysis: Use technical and fundamental analysis to identify trends and make informed decisions. Trend analysis involves studying historical market data and economic indicators to understand market patterns and potential future movements.
3. Stay Updated: Keep up with market news, economic indicators, and company performance. Staying well informed helps you make better investment decisions based on current events and trends.
4. Set Investment Goals: Define clear investment goals and strategies. Having a plan helps you stay focused and avoid making impulsive decisions based on short-term market movements.

When Is the Best Time to Invest?

1. During Market Corrections: Market corrections, where prices fall temporarily, can present buying opportunities. Investing during these periods can allow you to purchase assets at lower prices, potentially benefiting from future recoveries.
2. At Market Lows: Investing during market lows or after significant declines can offer the chance to buy undervalued assets. However, it’s essential to conduct thorough research and ensure the investment aligns with your long-term goals.
3. Regularly and Consistently: Regardless of market conditions, regularly investing a fixed amount can help you build wealth over time. Consistency in investing allows you to take advantage of market fluctuations and benefit from compounding returns.

Conclusion

The best time to invest is not about pinpointing the perfect moment but about adopting a strategic approach that aligns with your financial goals and risk tolerance. While market timing can offer potential benefits, it also comes with challenges and risks. By focusing on long-term investing, dollar-cost averaging, and keeping up-to-date, you can make more insightful decisions and improve your chances of achieving your investment goals. Remember, successful investing is often more about strategy and discipline than trying to time the market perfectly.

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Last year we faced a pandemic that was very difficult to comprehend not just for individuals, but also for the overall economy.

Now, even if the second wave of a pandemic is still on the rise, the S&P BSE Midcap Index has outperformed the benchmark S&P BSE Sensex Index in the last five months since the end of 2019.

If we compare the performance of mid-cap stocks to last year, we will get to know that these companies had suffered a lot in 2019 but today, we don't see a major change in these stock’s prices.

In fact, the outperformance of India’s mid-cap stocks over their larger peers may take a deep breather, as per the new investors. In the fiscal year 2021, the BSE midcap index rose 91% as India’s market capitalization rose up to Rs91 trillion in a year and hence we can predict that the BSE Sensex Index has outperformed the Sensex post end of the pandemic; according to Bloomberg data.

Even the smaller stock of mid-cap companies has gained approximately 33% in a short period, which is more than double according to the set benchmark.

Mid Cap Stocks May Stop Growing Upwards: Rising Cases

As the mid-cap stocks outperformed the large-cap stocks in 2020, this year the experts predict that these stocks may hit a pause because of the second surge of COVID 19 infections across the country.

Due to the sudden pandemic, many investors are seeking large-cap stocks, especially in Bank stocks. In the current situation, everyone wants to play safe and therefore, investors find large-cap stocks (primarily bank stocks) are the safest options to invest in.

Mid-cap stocks may take a pause for some time but the performance depends a lot on the pace of vaccination. Last week, the Indian government announced that the vaccines will be available for everyone ranging over the age of 18, applicable from May 1.

As of now, India has vaccinated over 13 crore vaccinated doses and by doing this, the country becomes one of the fastest nations to vaccinate many people within a short span of time.

Earlier, investors used to be attracted towards mid-cap stocks as these stocks were relatively cheaper than other stocks, but that’s not the condition anymore. Nowadays, large companies are better equipped to handle crises and therefore these stocks are becoming the top priority of investors.

How Midcaps Fared Thus Far (Change)

Mid-cap companies in India are those who have a market capitalization of Rs 5k Crore and less than Rs 20k Crore. These companies come under the top 100 companies that are listed on the stock exchanges (BSE and NSE). If we compare mid-cap stocks with the small caps, you will find out that the mid-cap stocks come with a moderate risk as compared to small-cap stocks. The risks of these stocks are comparatively higher than large-cap stocks.

Another advantage of applying for mid-cap stocks is that these stocks offer an opportunity for growth and in future, these stocks perform well with outstanding returns than large-cap stocks.

Mid-cap stocks are mainly responsible for boosting up the market share and profitability.

According to the present situation, the markets are in rallied mode, and when such things happen, investors are generally inclined towards large-caps, however, after the crash of 2020, investors have started to channelize their portfolio into mid-cap and small-cap stocks.

The primary factor that worked in the favor of mid-cap stocks is its low-interest regime that has been controlled by the Reserve Bank of India. Because of the low-interest rates, the capacity of taking risk appetite increases, which makes investors invest more in mid-cap stocks than other stocks.

Experts see a strong connection between the midcap index and repo rates. High liquidity and moderate risks are the major factors that contribute to the mid-cap rally.

A brokerage house says, whenever there is a disturbance, it has been followed by outperformance in mid-cap and small-cap indices. The same trend has been noticed in 2009, 2016, and 2017. This year: in March 2021, the Midcap Index outperformed both the Nifty Small-Cap and Nifty 50 indices.

If we see the performance of the Nifty Midcap index over the others, then last year, the Nifty mid-cap index bounced back by over 70 percent post-pandemic. However, Smallcap indices gained 19% in 2020.

Correction Phase

As the second wave of infections is still on the rise, the major indices of India Sensex and Nifty have seen some contraction this month. On April 20, Sensex fell 10 percent, after maintaining an all-time high of 52k levels in February. The Nifty has also gone down by 6% to 14,296 levels on April 20, after witnessing a peak of 15k levels.

Looking at the current scenario, investors are moving towards large-cap stocks considering it as the safest option to invest at this time.

However, the movement of investors toward large-cap stocks is temporary, they are doing this only because of market volatility. Once the market returns to its original pace, investors will prefer mid-cap stocks over long-term stocks.

Market Move in the Next Months

The ease of availability of vaccines, and economic recovery are some of the factors that may decide the market way; which way the stock market will move in the future.

According to the credit rating agency, Moody, the second wave will definitely hurt the economy which may affect the country’s future growth, however, the agency has also stated that the economy will grow in the double digits after a few months.

Conclusion

If the second wave curbs quickly and the economic resurgence gets started then mid-cap stocks will become the investor’s first choice over large-cap stocks. In 2020, when the stock market fell, the market saw a big bull which extended up to 2021.

Due to the unpredictability of the stock market, mid-cap stocks too had an unbeaten run. Although the mid-cap market sees a slower pace in the market, they will rise once the market regains and all things come at a normal pace.