Midcap stocks have room to correct; buy the dips: Chris Wood

Thus far in calendar year 2023 (CY23) the Nifty Midcap 100 index has surged 29 per cent, as compared to 11 per cent gain in the Nifty 50

The sharp rally in the midcap stocks has made valuations expensive, and there is room for a correction, wrote Christopher Wood, global head of equity strategy at Jefferies in his latest note to investors, GREED & fear.

The midcap index, Wood said, now trades at 24.1x 12-month forward earnings compared with 18.7x for the Nifty. Rising crude oil prices, he believes, are another worry for India, which imports nearly 80 per cent of its annual crude oil requirement.

"In this respect, there is clearly room for a correction in the mid-cap area, most particularly as a continuing rise