Investors need to be very careful while choosing midcaps at current valuation, said Yogesh Patil, Fund Manager-Equity at LIC MF.

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“We also keep reasonable expectation at this point of time because in most of the market positives or outcomes are already discounted in short term.

"However, there are certain midcap that still offer upside here so we need to keep here stocks specific approach and stock selection makes a big difference at this point of time," he added.

“We are selectively optimistic on midcap universe. Business cycle, especially in midcap space, will continue to be volatile and it has a very high correlation with GDP. Historically, midcap company’s performance is heavily linked to GDP growth so it all depends on the future growth expectation of the GDP and we see an upside in GDP from here at least," Patil said.

On sector preference, Patil said, “Currently, we like IT, consumer durables, FMCG, chemicals and export-oriented sectors. We also like some of the selected large cap financials based on their capital requirement and ability to gain market shares.”

He added, “We are positive on healthcare and pharma also but somewhere we get stuck in between the valuations and ability to grow. Because of valuation, we have slightly reduced weight on pharma but we still like the sector.”

For the full interview, watch the accompanying video.

(Edited by : Anshul)