Experts say 2019 could be better than 2018 for mid, smallcaps; 15 stocks that could return 15-34%

Harendra Kumar of Elara Capital said given the overall robustness in earnings recovery, 2019 could well be a year of midcaps and smallcaps.

It would have been an year of negative returns if not for the up move seen in last two months of 2018. On October 26, Nifty50 was down 4.7 percent year-to-date, but thanks to November rally, it closed 2018 with a gain of 3 percent.

Even for broader markets, the November rally helped BSE Midcap and Smallcap indices cut losses and end the year lower by 13.4 percent and 23.5 percent, respectively.

The sharp slide in crude oil prices, rupee appreciation from historic lows, hope of rate cut on favourable macros, etc. helped the benchmark indices turn positive and broader markets cut losses.

Now the year 2019 is likely to be good for midcaps and smallcaps, experts said, the return could be in double-digits and many stocks are expected to show better earnings growth.

"Sharp decline in crude prices, appreciation in INR versus USD, and fall in bond yields augur well for the market, however, uncertainty regarding elections in 2019 might keep markets volatile," Equirus Securities said.

Mid and small-cap earnings were hurt more due to crude, currency and interest cost increase. "Therefore, reversals in the same should lead to better earnings revival. We believe 2019 will be a good year for small & midcaps," the research house said.

Harendra Kumar - Managing Director, Institutional Equities, Elara Capital also told that midcaps and small caps have seen sharp correction in 2018 and several companies with solid fundamentals are available at reasonable valuations now.

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