Analysts suggest that the overall market valuation has become attractive after the recent correction and investors can start buying large-cap stocks from a medium-to-long term perspective.
After the outperformance of the past three years, they should be prepared for modest returns in the near term
2022 was a rough year for global equity markets. Of all the segments, small-cap was the worst-hit. So what led to a dismal performance of small-caps in 2022 and which segments emerged victorious?
Multi-cap funds, with their higher exposure to mid- and small-caps, can outperform but with higher volatility
The fund took exposure to 270 stocks in three years and has held 67 stocks consistently
On an average, small-cap funds have generated annualised returns of 67.5 per cent in the last two years
13 stocks from the Nifty Midcap index and 18 from the Nifty Smallcap index hit fresh 52-weeks lows during the current week
Samir Rachh outperforms peers despite fund's size constraints
In August, these stocks underperformed Sensex by 9 percentage points. Previously, they had seen sharper underperformance in Sept 2018
The top five buys of small-cap equity funds in April were Hindustan Copper, Hathway Cable & Datacom, Lux Industries, Bharat Rasayan and Dilip Buildcon
Allocate 10-15% to these funds for a 10-year period, don't just rely on history
Devanghshu Datta looks at the historical trends and explains why there is room for an outperformance from smaller stocks, especially the small-caps
Take limited exposure to these stocks and opt for the fund route if you aren't adept at direct investing
Stocks crossing 200-DMA are expected to attract more buying momentum with prices seen rallying further
Twenty-five of 46 such schemes, or 54 per cent, outperformed the benchmark indices
Since March 23 market lows, small-cap funds have given nearly 52% returns
Many brokerages and fund houses were expecting a more broad-based rally this year, after acute polarisation in the markets over the past two years
For SBI Small Cap Fund and DSP Small Cap Fund, lump sum investments remain suspended
Another positive of small-cap stocks is that they have a high correlation with the economic growth cycle
As economic growth bottoms out, liquidity stays benign, corporate earnings pick up and risk aversion diminishes, we expect the valuation discount of mid-caps to narrow vis a vis large-caps in CY20