Will midcaps and smallcaps outshine larger peers in Samvat 2079?

Secondary rung counters or the lesser known names outperformed the larger peers and the so-called bluechip counters in the Samvat 2078 at the Dalal Street.

A host of analysts believe that the trend is likely to continue and midcap and smallcap stocks will continue to shine brighter than the list-A companies in the upcoming year, that is, Samvat 2079.

They believe that largecaps of tomorrow will rally better than the outperformers of the yesteryears as the growth potential in bluechip or the large companies remain capped. However, from the safety point of view, they still have an edge.

However, Vinod Nair, Head of Research, Geojit Financial Services believes that its not a certainty as performance of midcaps and smallcaps would vary on a case to case basis.

According to Siddarth Bhamre, Research Head, Religare Broking, "If markets consolidate with positive bias then there is high probability of mid and smallcap space to outperform.

"However looking at the global scenario we would prefer to be in blue-chip names to generate optimal risk adjusted returns," he cautioned.

S Ranganathan, Head of Research, LKP Securities said that large Caps have been preferred till now due to FII selling and once the tide turns the mid and smallcaps will beat the largecaps.

Amit Jain, Co-Founder, Ashika Global Family Office Services added that there are high possibilities that mid and smallcap stocks can beat nifty50 in the next 1-3 years time horizon as most of the stocks in this space are driven by domestic investors.

Deepak Jasani, Head of Retail Research, HDFC Securities said that there are good chances that smallcaps might beat largecaps in the coming year due to low ownership, fast adaptation to changing times, shift from unorganised to organised mode and more. "Mid Caps may however perform in line with largecaps."

Siddhartha Khemka, Head Retail research said, "A ;ot of niche mid cap sectors which are focused on domestic consumption and capital goods stocks within the mid cap space could do well over the next 1-2 years."

Vikram Kasat, Head- Advisory, Prabhudas Lilladher said that mid and small caps outperform large caps not only over the past 3 months, but also over the past 6 months and 1 year.

"In mid and smallcap space, one should go with company specific because it’s more of a bet on management rather than any other factors whereas large caps have their own space which is already proven," he advised.

Vaibhav Agarwal, Head of Research, Basant Maheshwari Wealth Advisers said midcaps and smallcaps generally do well after a rally in largecaps. "There should be a broad based rally after many years. Valuations are more attractive in these stocks."

Divam Sharma, Director, Green Portfolio sees a huge valuation gap between mid and smallcaps. "We will see huge growth in this segment also considering most of the manufacturing companies are in this category," he added.

Sunil Damania, Chief Investment Officer, MarketsMojo also believes mid and small caps should outperform large caps. "If you look at the data from the last Samvat , there is hardly any difference between the performance of large, mid and smallcaps.

The performance of the Indian equity market going forward would be driven more by small and mid-caps, he added. "Another reason we are bullish about mid and small-caps is because the number of retail investors has increased yearly."

On the other hand, Manish Jeloka, Co-Head, Products & Solution, Sanctum Wealth said that given the current environment, largecaps are expected to outperform the second rung counters.


(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)