As the benchmark indices recovered in the past few months from March lows, the broader market also participated in the rally on improving economic data points.

                     

The declining COVID-19 infections, progress on vaccine front, improving quarterly earnings along with FII inflow aided market sentiment.

Nifty50 has surged 57 percent from March 23 low, while the Nifty Midcap index went up 55 percent and Smallcap jumped 75 percent.

But in last one month, the broader market has had a tad bit of underperformance compared to frontliners as the Nifty50 gained over 10 percent against 6-7 percent gains reported by Midcap and Smallcap indices each.

Experts feel as the economic recovery continues in coming months, the broader markets will outperform over equity benchmarks. 

"Our case for two-year rolling returns indicate that the market has turned in favour of small and mid-cap stocks which are more reasonably valued and offer greater upside potential," Neeraj Chadawar, Head of Quantitative Equity Research at Axis Securities told Moneycontrol.

He believes that market volatility is likely to provide good opportunities for Midcaps and Small caps.

"The recent spate of IPOs and their success clearly indicates that there is an appetite for mid and small-cap stocks. Quality as an investment style is more likely to outperform over the medium term. We are overweight quality in our allocation strategy at this juncture," he said.

Here is a  list of  midcap and smallcap stocks that could give 14-64 percent returns:

Brokerage: Axis Securities

NOCIL

While, a weak H1FY21 is likely to drag the overall FY21performance, we expect company to report improvement in the overall business from H2FY21 (aided by unlock driven improving demand in replacement tyre segment) with a sharp rebound in volumes observed in FY22 on the back of new capacity commercialization, economic growth bouncing back to normalcy and a low base. Further, a positive outcome on ADD levy and a structural opportunity to play as a dependable non-Chinese player augurs well for NOCILs long term prospects," said Axis Securities which expect NOCIL to register Revenues/Earnings CAGR of 20 percent/24 percent respectively over FY20-23.

Varun Beverages

We expect VBL to register Revenues/Earnings CAGR of 11 percent/29 percent respectively over CY19-22E. This growth will be driven by 1) consolidation in newly acquired territories, 2) distribution led market share gains, 3) cost efficiencies and margin tailwinds (cost rationalization and benign RM) should support EBITDA Margin in CY20E despite weak operating leverage. At CMP, stock trades at 10x EV/EBITDA on CY22E basis versus its 3-year mean of 14x EV/EBITDA.

CCL Products

We believe CCLP is well placed to deliver steady earnings over medium term given 1) expertise in customized blends & cost efficient business model, 2) long standing client relationships (around 50 percent revenue contribution from brand owners) 3) largest exporter of instant coffee in India 4) presence in Vietnam- world’s largest Robusta growing country 5) capacity additions in value added products (FDC & small packs) and 6) steadily improving branded retail business.

Minda Industries

We are bullish on MNDA's ability to comprehensively beat industry performance by 1) leveraging the broader vehicular trends of industry like EV, premiumization, automation 2) strategic inorganic acquisition to enhance product offering and gain market share 3) maintaining balance sheet discipline and maintain optimal leverage, 4) investing in R&D to bring technological change 5) tap on its deep rooted relationship with OEM’s to increase kit value.

Given its success in developing import substitution products, it would be able to capture the business opportunities offered by the ‘Atma-nirbhar Bharat’ move in auto sector. New product lines to aid margin and growth.

Mindtree

Management has initiated strong cost control measures like reducing the subcontractors, better service mix and higher execution which will help to gain long term sustainable operating margins. Management is confident in gaining the momentum and has worked efficiently with zero productivity loss. While traction is expected in Capital good and Digital initiatives remained strong, HiTech and automation is expected to gain pace post COVID-19. However company sees some near-term challenge in terms of softness in revenue growth and pressure on Q1 operating margin.