Mumbai: The valuation froth in midcaps has settled down but investors should be careful in picking midcap stocks, said Credit Suisse Wealth Management India.India's GDP growth could remain subdued over the next few quarters and if economic uncertainty persists, it could push funds into certain largecap stocks that are perceived as safer, resulting in higher market concentration, the report added.The report further said the recent macro-economic data does point at some green shoots in economic activities.
Credit Suisse Wealth, however, said it would wait for a few more months and observe the macro trends before calling it a full fledged recovery.The BSE MidCap index has gained 4.1 per cent so far in 2020, compared with 0.2 per cent gain in the Sensex in same period.
"If the recovery turns out to be broad-based and sustained, this could offer a good buying opportunity in midcaps.
The valuation froth of midcaps has certainly settled," said Credit Suisse."However, the headline index valuation is currently fair but not cheap and investors should, therefore, be careful in picking midcap stocks," the global brokerage added.