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After months of turbulence, mid- and small-cap indices are showing signs of life this July. With mutual fund inflows accelerating and select pockets seeing renewed buying, the tides may be turning. But is it momentum or just a mirage? Dive into the shifting dynamics that are quietly reshaping India’s broader market.

Here are three midcap stocks to buy as recommended by Raja Venkatraman of NeoTrader for Monday , 21 Jul.

METROBRAND: Buy CMP and dips to ₹1200, stop ₹1180 target ₹1350-1400

DALBHARAT: Buy CMP and dips to ₹2210, stop ₹2190 target ₹2450-2550

NATCOPHARMA: Buy at CMP and dips to ₹980, stop ₹950 target ₹1135-1165

METROBRAND: Buy CMP and dips to ₹1200, stop ₹1180 target ₹1350-1400

Why it’s recommended: Metro Brands has entered a long-term partnership with Clarks as its exclusive retail and digital partner in India and neighboring countries. The prices have dipped into the cloud support and formed a rounding pattern. The long body bullish candle seen on Friday augurs well for the prices. This has led to an improvement in the sentiment. With prices holding firm we can consider going long.

Key metrics:

P/E: 95.57,

52-week high: ₹1430.10,

Volume: 67.07K.

Technical analysis: Support at ₹1130, resistance at ₹1500.

Risk factors: Macroeconomic and political risks , cyberattacks and weak same-store sales.

Buy at: CMP and dips to ₹1200.

Target price:  ₹1350-1400 in 1 month.

Stop loss: ₹1180.

DALBHARAT: Buy CMP and dips to ₹2210, stop ₹2190 target ₹2450-2550

Why it’s recommended: Dalmia Bharat Ltd. is a cement manufacturing company. The firm engages in the business of inter alia, manufacturing and selling of cement, and refractories and generating power. The stock has been consolidating at the TS & KS bands and forming rounding patterns and inching higher.

Key metrics:

P/E: 222.33,

52-week high: ₹2257.70

Volume: 580.40K

Technical analysis: Support at ₹2100, resistance at ₹2700.

Risk factors: Global economic slowdown, trade tensions, and specific challenges related to the power generation sector.

Buy at: CMP and dips to ₹2210.

Target price: ₹2450-2550 in 1 month.

Stop loss: ₹2190.

NATCOPHARMA: Buy at CMP and dips to ₹980, stop ₹950 target ₹1135-1165

Why it’s recommended: The counter has undergone some ranging action as moving steadily higher forming a higher high higher low since mid-May 2025. On a recovery it faced a value area resistance that kept halting the upmove forming higher high and higher lows holding the TS & KS Bands for the past few days around 980 has been overcome. With steady volumes building up within the bands one can look for an encouraging upmove in the coming days.

Key metrics:

P/E: 10.02,

52-week high: ₹1638,

Volume: 1.51M.

Technical analysis: Support at ₹900, resistance at ₹1190.

Risk factors: High Product Concentration, USFDA Warning letter and Patent disputes and litigation

Buy at: above 670 and dips to ₹980

Target price: ₹1135-1165 in 1 month.

Stop loss: ₹950.

Mid- and small-cap indices have faced a rough ride over the past ten months, with the Nifty Midcap 100 and Nifty Smallcap 100 slipping 14% and 16%, respectively, from their September 2024 peaks. The downturn accelerated broader market volatility, pushing both indices even deeper below long-term benchmarks: as of February 2025, mid-caps and small-caps had tumbled roughly 21% and 25% since the previous highs.

July 2025 opened on tepid footing, yet fund flows signal renewed investor appetite. In June, mid-cap mutual funds absorbed ₹3,754 crore of fresh capital—up 34% month-on-month—while small-cap funds pulled in ₹4,024 crore, a 25% monthly jump. These inflows underpinned modest rebounds in early July, with the midcap index clawing back around 1.5% and the smallcap pack gaining about 1%, narrowing year-to-date losses even as both segments still lag the Nifty 50.

Sector rotation has favored quality convictions within mid-caps, as investors gravitate toward stocks offering stronger liquidity and earnings visibility. Small-caps remain more sensitive to valuation pressures and global risk sentiment, keeping volatility elevated. Overall, July’s performance underscores tentative recovery potential in mid- and small-cap stocks, driven by selective buying and robust fund flows, even as they contend with valuation gaps relative to large-cap peers.

Overall, midcap and small-cap stocks still hold appeal for those chasing returns above traditional large-cap equities. Yet, their propensity for swift price movements calls for a robust game plan, disciplined execution, and comprehensive due diligence. As themes in emerging markets shift—propelled by economic growth and technological breakthroughs—savvy investors who carefully weigh these growth prospects against their accompanying risks are well-positioned to reap meaningful gains over the long haul.

Raja Venkatraman is the co-founder of NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.

Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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