Since Jan 2018, Nifty and Sensex delivered positive returns of 10% and 8% respectively, BSE small cap index slumped 31%, while BSE mid cap index dropped 20%. Though these numbers tell us what the overall index lost, individual small and mid cap stocks were touching 52-week lows every other day and individual damage to most of the stocks in this category was to the tune of 50-60%, some even more than that.
Despite that we are quite excited about opportunities emerging in small and mid cap space. You may argue that most of small caps and mid caps have wiped out your hard earned gains over last 2 years. In fact those who invested in small and mid caps in past 2 years are sitting on significantly higher losses and may be thinking to stay away from them.
However, we beg to differ. We firmly believe that these are the opportune times to invest in broader markets and not in large caps. The negative sentiments around small and mid caps have brought excellent businesses down to historically low valuations. The fall in stock prices of many small caps and mid caps by more than 50% from their peaks has not happened for the first time. This has happened in past and companies with good business fundamentals have always bounced back strongly.
Staying invested may be easier said than done when the markets are in bear grip, but it is a necessity for long-term wealth creation. Patience will pay rich dividends to those investors who learn to weather the storm. In fact, investments made in right set of companies during bad market conditions rewards long term investors in much bigger way.
To make our readers understand the benefits of investing in small caps and mid caps during bad times like we are experiencing now, we have released - Multibagger Small / Mid Caps and Long Term Investing Report recently on 10th July 2019.
The objective of this report is to make our members understand why its utmost important to invest in equities keeping a real long term view and becoming a discipline investor by investing in equities during good as well as bad times. We are confident that this report will reinforce your believe to stay invested during these turbulent times in broader markets and build your conviction further encouraging you to invest in small and mid caps with good business fundamentals.
Broadly, Multibagger Small / Mid Caps & Long Term Investing report covers:
1. 6 Major Reasons for Decline in Small & Mid Caps
2. Budget 2019 - Steps towards easing Liquidity Crisis
3. Benefits on Investing in Small & Mid Caps during Bear Phase
4. The Bulls, The Bears & The Farm
5. Long Term Charts of Small & Mid Caps (Hidden Gems & Value Picks stocks)
6. Release of Special Report - Potential 5-Bagger in 5 Years in July 2019
To receive our Multibagger Small / Mid Caps and Long Term Investing report, simply fill up the form below. Once submitted, you will receive the report directly in your inbox.
If you are unable to view the form, click here to fill it online to receive our Multibagger Small / Mid Caps & Long Term Investing report directly in your inbox.
Coming back to the current situation, the BSE small cap index is down by 31% from its peak made in January 2018. The liquidity crisis in NBFCs, the DHFL and IL&FS defaults, series of rating downgrades by rating agencies, lenders dumping stocks of debt laden companies have taken the steam out of small caps. Fear and misinformation has shattered investor’s confidence and hence quality businesses are back to cheap valuations.
To ease NFBC liquidity crisis and get economy growth back on track, Government is in process of taking all possible corrective measures. In Budget 2019, Finance Minister Nirmala Sitharaman announced that the government will provide a one-time six months partial credit guarantee to public sector banks to buy high-rated pooled assets worth Rs 1 lakh crore from NBFCs. This will provide the much-needed liquidity to NBFCs, they can thus liquidate their portfolio and meet their liabilities in a timely manner.
Moreover, below are the few announcements made in the budget which certainly qualify as steps in the right direction.
- Recapitalisation of banks to the tune of INR 70,000 crores
- The Credit Guarantee Enhancement Corporation to be set up in FY20
- The action plan put in place to deepen the market for long-term bonds
- 2% interest subvention for all GST registered MSMEs
We strongly believe that this is a great time to buy good quality small and mid size companies that have been beaten down. No one is talking about small caps these days and that’s the strong reason why we should invest in this segment. It’s wise to be greedy when there is fear surrounding small and mid caps. This is not the first time small caps have fallen out of favour and then gone on to recover smartly.
The correction has given investors an opportunity to sieve through and find good quality stocks which are backed by strong balance-sheet and robust cash flow. The broad underperformance of the small and mid-caps seems to be overdone and interesting bottom-up opportunities are now available in this space across sectors. Earnings revival could also set the ball rolling in terms of re-rating these categories of stocks.
Stay Invested & Keep Investing for Real Long Term. Bcoz "If you want your Money to Grow, Equities is the only Way to Go"
We are pleased to inform you that you can grab discount upto 30% and valuable freebies on our subscription services under Saral Gyan 9th Anniversary Offer. We suggest our members to consider current situation (post severe correction in small & mid caps over last 18 months) as a buying opportunity and invest in high quality small and mid cap stocks.