Performance in the mid-cap space will remain stock specific: Motilal Oswal Research

The CNX Mid-cap index had slipped 2.1 per cent in the last five trading sessions, as compared to 0.4 per cent fall in the Sensex, is trading 0.8 per cent higher as compared to a 0.7 per cent rise in the Sensex today.

After being battered since the past few days, mid-cap stocks have recovered in trade today and have performed in-line with the benchmark indices. The CNX Mid-cap index had slipped 2.1 per cent in the last five trading sessions, as compared to 0.4 per cent fall in the Sensex. It has moved up 0.8 per cent in noon deals, as compared to a 0.7 per cent rise in the Sensex.

“The mid-cap space had seen a good rally last year, and towards the end of 2012 there was a build-up of expectations of a 50bps cut in rates and good earnings growth. The large rate cut expectation has been belied and delayed the much needed interest outgo reduction," explains Ravi Shenoy, Asst Vice President (Mid-cap Research), Motilal Oswal Securities.

“As small companies, mid-caps have been facing working capital pressure from larger clients given tight money situation. Given that the liquidity situation is likely to be tight one may not expect any near-term breather on this front for mid-cap companies. This could continue until the end of the financial year end with pressure in the form of planned government disinvestment, delayed and reduced GOI spending and advanced tax outgo. Performance in the mid-cap space will continue to remain stock specific until the risk-taking appetite of investors comes back,” he added.

Stock Watch

Among individual stocks, Birla Corporation (up 7.5%), Peninsula Land (up 7.2%), Anant Raj Industries (up 6.5%) and Delta Corp (up 4.9%) are some of the top gainers in this space.

After losing 18% each on Tuesday, stocks of both Unitech and DB Realty recovered around 4% each in morning trade on Wednesday. Both the scrips made heavy losses on Tuesday after the reports that Unitech managing director Sanjay Chandra was in touch with CBI prosecutor in 2G scam and CBI has started enquiry in the scam.

The charges were denied by Unitech later. Unitech stock was trading at Rs 29.96, nearly 4.17% up from Tuesday's close while DB Realty stock was trading.at Rs 105.40, which was 4.36% up from Tuesday's close.

“The charts of both are quite similar to what happened in HDIL. I would advise traders and investors alike to stay away from these counters till there is complete clarity on the issues which the company face,” said Shardul Kulkarni, senior technical analyst, Angel Securities.

Fortis Healthcare has soared 5.5% to Rs 107 on reporting 26-fold rise in consolidated net profit at Rs 705 crore for the quarter ended December 31 2012 (Q3), mainly on account of exceptional one-time net gain of Rs 1,005 crore on dilution of stake in Religare Health Trust (RHT). It had posted net profit of Rs 27.02 crore for the same quarter of last fiscal.

“One can hold long positions in this counter with Rs 102 as stop loss,” advises Kulkarni.

“From the mid-cap space Hexaware looks good. One can buy this stock with stop loss at Rs 81 and target of Rs 90,” said Parag Doctor, head- trading strategies, Keynote Capitals.