INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Dalal Street crossed a milestone with a life high on January 29
It has been on a slippery slope of late despite occasional sparks of brightness
The correction has been sharp across the board
Midcaps and smallcaps have been bruised badly
The hammering has been so hard that some of the names have tumbled as much as 90 per cent from their January highs
And this has made investors scared like hell.
But Samit Vartak, the man who was spot-on in predicting the midcap pullback in 2017, shows no
He believes that the ongoing correction in midcaps is normal in a bull market
And instead of worrying, people should tap this opportunity as such chances do not come often
The Partner and Chief Investment Officer at SageOne Investment further says the good part of correction this time is it has corrected
indiscriminately - whether it's of good quality or with a dubious record
And now, huge value is being created in quality companies
However, for the bad apples, the pain is far from over
Hence, it's an excellent time for investors stuck in questionable companies to log out and move into good quality ones.
In Vartak's
terminology, bad quality firms are those that did not generate cash flow while good ones measured up well.
According to Vartak, the median
fall for top 1,000 companies has been 37 per cent
And many companies have come down by 50 per cent
But this time, good quality companies too have corrected by 25-30 per cent.
"I believe there is a huge value which has been created there
In the case of bad quality companies, there is much more pain left because they have gone up by 3,4,5 times
So, 30-40 per cent correction is not much for them," he explains.
Midcaps shot up crazily last year on the back of enormous liquidity in the
market, Vartak says, trying to bring in perspective
However, Vartak cautions investors not to make the mistake again -- falling for herd mentality, hiding into largecaps and going for
"This is the time to think away from the herd," he signs off.
