BSE Smallcap jumps 200% since March 2020 lows; is it right time to rebalance your portfolio?

Market analysts on Dalal Street believe this is the right time to rebalance your portfolio after a huge rally in the broader segment. The BSE Midcap and Smallcap index have gained 135% and 202%, respectively, since the low of March 2020. On the other hand, the benchmark BSE Sensex has gained 103% during the same period. Likhita Chepa of CapitalVia said that the valuation of the broader market has heated up after the rally. She believes that investors should shift rebalance their portfolio and shift their focus to largecaps. “One should lower their exposure in midcap and smallcaps now. Largecap may see good movement in the coming months,” she added while adding that the domestic equity market may see some profit booking after scaling their record high levels in the recent past. She also believes that this is not the right time to take fresh positions in the market. However, she is bullish on select largecap players. This included the State Bank of India, Asian Paints and IndusInd Bank. Chepa thinks that SBI can touch Rs 480 in the next 15 months, while Asian Paints and Motherson Sumi may rally towards Rs 3,320 and Rs 270, respectively. “Asian Paints looks attractive to us as its debt to equity ratio has remained constant in the past five years. We also like SBI as the lender's operating profit has beaten out estimates in the June quarter. We are also bullish on Motherson Sumi as its automobile production is improving in the Europe and US. This should add up in its revenue and EBITA margin going ahead,” she said. Sharing his views on the primary market, Chepa added that the sentiment of the primary market is quite linked with the secondary market. India has emerged as the third most preferable emerging market economy in terms of foreign funds. “Retail participation has increased due to rising internet penetration. “This is the right time for any company to look for funds from the primary market. Companies are taking advantage of the primary market. Investors should not make any decision on the basis of grey market premium,” she said.