Mid-, small-cap rally getting started, says expert; shares his take on Gensol Engg

Rudra Murthy BV, MD at Vachana Investments, on Wednesday said the broader market will start participating from now on in general. "A lot of people have got tired of holding the mid- and small-cap stocks and the last one and a half months they have seen the market moving up but not their portfolio. Now, what retailers will do is that they will start selling all their stocks when the real mid- and small-cap rally is just getting started and it started yesterday. This is the time to put fresh money into good-quality mid- and small-cap stocks. Don't buy simply because some stock has fallen 50-70 per cent from its peak," he told Business Today.

Citing an example, the market expert said, "Gensol Engineering was at Rs 1,100 and currently it is available at around Rs 60. Retailers will think, let me buy Gensol Engg because it was once at Rs 1,100 level and now available at Rs 60. It will not come back to Rs 100. For me, it is not even worth buying even at Rs 60."

Murthy advised that the broader market will participate but investors should buy quality mid- and small-cap counters. "You have to buy places where you have valuation comfort and you have to buy them and hold them for a good period because you can't expect big moves to come in a short period," he underscored.

Looking back, Gensol has informed exchanges that promoters Anmol Singh Jaggi and Puneet Singh Jaggi stepped down as managing director and whole-time director of the company. The Jaggi brothers said they have resigned due to the direction given under Sebi's interim order.

The blow came after the Securities Appellate Tribunal's (SAT's) decision to deny interim relief to the company, which is currently under investigation for alleged fund diversion.

Prior to this, market regulator Sebi barred Gensol's promoters -- brothers Anmol and Puneet Jaggi -- from accessing stock markets and ordered a forensic probe into their listed renewable energy firm. Sebi also decided to put on hold the stock split (1:10) exercise announced by the company last month.

It alleged Gensol's promoters diverted hundreds of crores raised for electric vehicle (EV) procurement into personal indulgences such as luxury real estate and questionable transactions with related entities.

Bourses BSE and NSE have put the securities of Gensol under the ESM (Enhanced Surveillance Measure) framework. Exchanges put mainboard companies with a market capitalisation (m-cap) of less than Rs 1,000 crore under the ESM structure. The beleaguered firm's market capitalisation (m-cap) today stood at Rs 228.55 crore.