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Rally in mid-cap stocks can last, says Deutsche Bank

Reuters
A man looks at a screen across the road displaying the Sensex on the facade of the Bombay Stock Exchange (BSE) building in Mumbai February 6, 2014. REUTERS/Mansi Thapliyal/Files

Reuters Market Eye - The rally in mid cap stocks, which have risen 30 percent since August, compared with a 19 percent rise in Sensex, can extend to catch up on significant underperformance it saw in last three years versus the large caps, Deutsche Bank says.

For graphic - http://link.reuters.com/xab97v

"Mid cap stocks tend to rally sharply when economic growth is expected to be at an inflection point. While the jury is still out on the pace of economic recovery, we believe that growth has bottomed, currency has stabilised and the twin deficits have shown a marked improvement," Deutsche Bank said in a report on Wednesday.

The bank flags Bharat Forge (NSI:BHARATFORG), Hindustan Petroleum Corp (NSI:HINDPETRO.NS - News), Jain Irrigation Systems (NSI:JISLJALEQS), LIC Housing Finance (NSI:LICHSGFIN.NS - News), Shree Cement (NSI:SHREECEM.NS - News), Shriram Transport Finance (NSI:SRTRANSFIN) and Yes Bank (NSI:YESBANK.NS - News) as its top mid cap picks.

(Reporting by Abhishek Vishnoi)