MUMBAI: Morgan Stanley believes that it is time for investors to start looking at stocks in the broader market given the relative damage they have suffered.
The broad market is likely to play catch up in the coming months, and the wide performance gap between the benchmarks and the broad market is likely to come down with the broad market rising rather than Nifty falling, said Morgan Stanley.
“The performance gap between narrow and broad market is close to all-time peaks. Valuations have nothit all-time lows, but significant de-rating has happened. The bid has vanished and breadth indicators are in buy territory,” said Morgan Stanley.
The BSE MidCap and SmallCap indices have fallen 16 per cent and 27 per cent in the last one year while the benchmark Sensex has gained 6 per cent during the period.
Indraprastha Gas, Indian Hotels, Cyient, Ipca Lab, Just Dial, Amara Raja , Apollo Hospitals, Edelweiss Financial, Jubilant Food-Works, Oberoi Realty and Prestige Estates are among the top mid-cap ideas of Morgan Stanley. All these stocks are rated overweight by Morgan Stanley. These stocks fit the description of growth at a reasonable price, said Morgan Stanley. They will bring positive change in return on capital in the coming two years, strong earnings growth and reasonable valuations, the firm said.