10 mid-cap stocks to own

2014 has been a year of mid-cap stocks. Quite a few can run up even higher

The S&P BSE Sensex has run up about 34 per cent over the past one year. This rally is fuelled by the formation of a new, stable government at the Centre and hopes of macroeconomic recovery, some signs are already visible.

More, many market gurus expect the Sensex to reach 30,000 levels by December and 40,000-45,000 in three to four years. The steps taken by the Reserve Bank of India in a year are bearing fruit, with the rupee-dollar exchange rate stable, current account deficit reducing and inflation inching lower. The government has taken steps (more are desired). Over a period, these should result in higher gross domestic product (GDP) and earnings growth rates. While the GDP growth for 2014-15 is pegged at over 5.4 per cent versus 4.7 per cent in 2013-14, earnings are expected to grow 12-15 per cent in 2014-15, with stronger growth after that. The softening of global crude oil and metal prices should help the country. The flip side is the worsening of geopolitical events, sharper-than-expected rise in US interest rates and higher-than-estimated slowdown in Europe and China, among others.

While most large- and mid-cap stocks have rallied this year, there are still some that offer good upside from current levels and enjoy strong earnings visibility. Though large-cap stocks will continue doing well, if the expected run continues, mid-cap stocks should deliver better returns. Here is a list of 10 such stocks within the BSE 500 that have high upside potential and are expected to deliver healthy earnings growth over FY14-17. (Click for table & charts)