Tuesday, October 17, 2006


Whither mid-caps?

The sensex is touching new highs for the past 2 trading sessions. But when I look at my portfolio, nothing much seems to be happening. It took some time and effort to figure out what is happening. The gain is not broad-based, for example, on Monday where the sensex touched the all time high, the actual losers were more than the gainers by a ratio of 1.3:1. No wonder my portfolio does not seem to be improving as it is dominated by mid-caps.

The worry, and this seems to be a common worry is that if the gains in the sensex can be attributed mainly to mid-caps and the gains are not broad-based, then any crash or fall at this stage will bring down the large caps to a certain degree, but the mid-caps will be affected to a major degree. This is even more of a problem when most of the mid-caps are nowhere close to their previous highs.

Query remains as to what can be done at this point ? Selling in a panic is not so good, however, if thers is a chance at profit booking, one should do that and invest the funds in other activities (mutual funds, post office schemes, etc). That way, if there is a crash, one does feel totally helpless. Right now, I am holding on, but my instincts are telling me to get some cash in hand rather than fully investing in equity.

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