Indian equity investors have been on a roller-coaster ride for the last one year. The BSE Sensex and the BSE Mid-cap Index were at 17,425 and 6,238, respectively, a year ago. On 17 May 2013, the Sensex touched a high of 20,286, recording a gain of 16%. The BSE Mid-cap rose faster. It peaked on 8 January 2013, up 17% at 7,336.
While investors were busy predicting higher levels for the indices, the market caught them off-guard. When the US Fed spoke of tapering its quantitative easing programme, and the rupee tumbled, the equity market followed suit. As foreign institutional investors withdrew money from India, even quality scrips fell.
The toll was severe for mid-caps: in June, the Sensex fell 1.84%, but the mid-cap index lost 6.65%. Savvy investors, however, are treating the fall as an opportunity to buy quality mid-caps.