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Mint
a day ago
- Business
- Mint
Market volatility hits mid and small-caps: Are large-cap stocks a safer bet now?
The recent volatility in the Indian stock market has taken a toll on mid- and small-cap stocks, as investors grow increasingly cautious amid global uncertainty and elevated valuations, prompting them to exit these segments in search of safer bets in large-cap stocks, which are often perceived as more stable during turbulent phases. Global markets have been on edge this week, with the latest escalation between Iran and Israel adding fresh strain to an already fragile global economy—one still grappling with the effects of trade tensions and the ongoing Russia–Ukraine war. However, the Indian stock market managed to end the week with healthy gains, supported largely by strength in blue-chip stocks. Despite rising crude oil prices, prolonged trade tensions, and limited progress in negotiations between the US and its key trading partners, Indian large-cap stocks have continued to draw investor interest. Optimism around corporate earnings—buoyed by a turnaround seen in the March quarter and expectations of stronger performance in the June quarter of FY26—along with relatively reasonable valuations compared to mid- and small-cap counterparts, has led investors to shift their focus toward these more established, higher-priced stocks. Against this backdrop, both the Nifty 50 and Sensex closed with gains of nearly 2%, while the Nifty Midcap 100 and Nifty Smallcap 100 indices remained under pressure for the second consecutive week, each declining by up to 1%. Recent data also indicates a shift in retail investor preference toward large-cap stocks, as ownership in mid- and small-cap counters fell to a nine-quarter low amid a broader market sell-off during the March 2025 quarter, according to the NSE's report titled India Ownership Tracker. During the March quarter, mid- and small-cap stocks underperformed their large-cap counterparts, further amplifying valuation concerns in these segments. According to the latest analysis by domestic brokerage firm Kotak Institutional Equities, small caps led the earnings cuts, with a 6% reduction in FY2026 EPS estimates compared to a 2% cut for large caps and 3% for mid-caps. On the valuation front, the Nifty SmallCap 100 is trading at a one-year forward price-to-earnings (P/E) multiple of 27.2x—significantly higher than its long-term average and close to the Nifty MidCap 100's P/E of 28.3x. This sharp rise in valuations places the Nifty SmallCap 100 near its historical peaks, levels last seen during previous phases of overheated sentiment, such as mid-2021 and pre-2018, according to domestic brokerage firm InCred Equities. In contrast, the Nifty 50 is trading at a more reasonable 20.7x forward P/E. The narrowing valuation gap between small- and mid-cap stocks is making investors uncomfortable. Analysts believe this has prompted a shift in investor focus toward large-cap stocks. Looking ahead, analysts expect small and mid-cap stocks are likely to underperform in the short term, given their elevated valuations and absence of short-term triggers. Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said, "The recent weakness in the broader market is likely to continue since they are excessively valued, and the ongoing risk-off can lead to further selling in this segment. Money may move from the overvalued SMIDs to the fairly valued, safe large caps in financials, industrials, autos, and real estate." 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 taking any investment decisions.
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Business Standard
10-06-2025
- Business
- Business Standard
Stock Market LIVE Updates: Sensex, Nifty flat; SMIDs rise; Jindal Saw up 10%, Jana SFB 3%
Sensex Today | Stock Market LIVE on Tuesday, June 10, 2025: The Nifty Midcap100, and Nifty Smallcap100 indices were up by 0.18 per cent and 0.35 per cent, respectively 10:50 AM Stock Market LIVE Updates: NIBE shares soar 8% on signing pact with DRDO for modular bridging systems Stock Market LIVE Updates: Shares of defence technology company, NIBE, soared over 8 per cent in Tuesday's intraday trade as it secured the technology transfer license for its modular bridging system from the Defence Research and Development Organisation (DRDO). NIBE's stock rose as much as 8.01 per cent during the day to ₹1,812 per share, the biggest intraday gain since February 7 this year. The stock pared gains to trade 4.22 per cent higher at ₹1,749 apiece, compared to a 0.09 per cent advance in Sensex as of 9:53 AM. READ MORE 9:58 AM Stock Market LIVE Updates: Jindal Saw share price rallies 9% on expanding its footprint in the Middle East Stock Market LIVE Updates: Jindal Saw share price was rising in trade on Tuesday. The stock surged 9 per cent to hit an intraday high of ₹253 per share. The rally in Jindal Saw shares came after it said the Board has approved incorporation of a step-down subsidiary in United Arab Emirates. The Board has also given its nod to enter into JV agreement between Jindal Saw Holdings FZE, a subsidiary of the company, and BUHUR FOR INVESTMENT COMPANY LLC, KSA, for incorporating a new company in Kingdom of Saudi Arabia. It will also enter into JV agreement between Jindal Saw Holdings FZE and RAX United Industrial Company, KSA, to incorporate a new company in Kingdom of Saudi Arabia. 9:41 AM Stock Market LIVE Updates: Investors were seen buying defence stocks; here's why Stock Market LIVE Updates: Buying interest was seen across defence stocks. Bharat Dynamics share price was up 2 per cent, Bharat Electronics share price 1.35 per cent, Data Patterns share price 2.5 per cent, Astra Microwave Systems share price 1.5 per cent, and HAL share price 1.2 per cent today. Defence shares were trading higher amid report that the Indian Army is expected to get ₹30,000-crore boost with a new surface-to-air missile system, which will be cleared for acquisition by the Ministry of Defence. 9:21 AM Stock Market LIVE Updates: Broader markets rise Stock Market LIVE Updates: Broader markets rise -- Nifty SmallCap 100 index rose 0.46 per cent -- Nifty MidCao 100 index was up 0.27 per cent 9:17 AM Stock Market LIVE Updates: Nifty rises at opening bell Stock Market LIVE Updates: Nifty rises at opening bell -- Nifty opens at 25,196.05 -- Nifty previous close was 25,103.20 9:16 AM Stock Market LIVE Updates: Sensex opens higher Stock Market LIVE Updates: Sensex opens higher -- Sensex opens at 82,643.73 -- Sensex previous close was 82,445.21 Connect with us on WhatsApp
Economic Times
06-06-2025
- Business
- Economic Times
MF Tracker: Will this Rs 30,000 crore smallcap fund continue to maintain its long-term performance?
Launched in September 2009, the SBI Small Cap Fund is given a three-star rating by Value Research and is unrated by Morningstar. SBI Small Cap Fund emerged as the best-performing equity mutual fund based on daily rolling returns, delivering a CAGR of 21.87% over the past seven years. This performance stands out among approximately 171 equity mutual funds during the same timeframe. Launched in September 2009, the fund is given a three-star rating by Value Research and is unrated by Morningstar. Based on daily rolling returns, the fund has offered 20.68% CAGR in the last five years and in the last three years, it gave a CAGR of 26.13% based on daily rolling returns. Also Read | Nippon India Taiwan Equity Fund tops return chart with 22% in May. Can the momentum sustain? Based on the trailing returns, the fund has underperformed or performed at par with the category average. In the three months, the fund gave a 15.23% return against 18.64% as the category average. In the last six months, the fund lost 6.95% against a loss of 6.49% by the smallcap category. In the last one year, three years, and five years, the fund has underperformed against its category average in the similar period. Over the past year, the fund delivered a return of 7.43%, lagging the category average of 14.96%. Over three years, it posted an 18.87% CAGR versus the category's 23.38%. Across five years, the fund returned a CAGR of 29.31%, falling short of the 34.23% category average. Note, the returns of benchmark BSE 250 Small Cap - TRI were not available in the ACE MF, so ETMutualFunds could not compare the performance of the fund with the benchmark. According to an expert, since its inception, SBI Small Cap Fund has consistently outperformed its benchmark, delivering a 21.87% CAGR over seven years based on daily rolling returns, an impressive feat in the small-cap space. 'What sets the fund apart is its consistency across market cycles, including periods of high volatility like the 2020 pandemic crash and the 2018 mid-cap/small-cap correction. Even during these downturns, the fund demonstrated lower drawdowns compared to peers, suggesting superior risk-adjusted returns,' Shruti Jain, Chief Strategy Officer, Arihant Capital Markets, shared with adds that the fund follows a bottom-up stock-picking approach, with a focus on companies having scalable business models, clean governance, and healthy balance sheets. Over the last 10 calendar years (2015–2024), the smallcap fund posted negative returns only once—in 2018—when it declined 19.62%. Its best performance came in 2017, delivering a stellar return of 78.66%, the highest in the decade.'The fund has consistently showcased strong downside protection compared to both its benchmark and peers. During the 2018 small-cap correction, while the Nifty Small Cap 100 index dropped by 44.4%, SBI Small Cap Fund limited its decline to just 28.1%, outperforming the category average fall of 29.4%,' Jain further commented.'Again, in the 2020 COVID-19 market crash, the fund's downside capture ratio stood at an impressive 43.6, meaning it lost less than half as much as the broader market. In recent corrections, the funds have been almost at par with its peer and benchmarks. These figures highlight the fund's resilience and effective risk management, even during some of the most volatile market phases,' she added. Also Read | 9 equity mutual funds offer over 20% CAGR in seven years. Are there any included in your portfolio? If an investor invested Rs 10,000 at the time of the inception of the fund, the current value of the investment would have been Rs 1.23 crore with an XIRR of 21.37%. In the last five years, the value of the same monthly investment would have been Rs 9.53 lakh with an XIRR of 19.14%.In the last three years, the value of the same SIP investment would have been Rs 4.44 lakh now with an XIRR of 14.93%If an investor made a lumpsum investment of Rs 1 lakh at the time of the inception of the fund, the current value would have been Rs 16.91 lakh now with a CAGR of 19.67%. In the last five years, the value of the same lumpsum investment would have been Rs 3.58 lakh with a CAGR of 29.08%. In the last three years, the value of this investment would have been Rs 1.68 lakh now, with a CAGR of 18.90%.The smallcap fund had 79.73% in equity, 0.17% in debt, and 20.10% in others as on April 30, 2025. In comparison to the small cap category, the scheme is overweight on others, whereas underweight on equity and debt. The category on average had 91.20% in equity, 0.29% in debt, and 8.51% in others. Being a smallcap fund, the scheme invests 76.96% in small caps, 1.77% in mid caps, and 21.27% in the allocation of the small cap fund, Jain said that SBI Small Cap Fund has demonstrated effective downside risk management by maintaining a well-diversified portfolio, avoiding excessive concentration, and adopting a bottom-up stock selection approach and the fund manager tends to focus on companies with strong balance sheets, quality management, and scalable business models traits that help weather economic slowdowns. The PE and PBV ratios of the midcap fund were recorded at 40.75 times and 6.26 times, respectively, whereas the dividend yield ratio was recorded at 0.59 times as of April fund had the highest allocation in the finance sector of around 7.94% compared to 7.53% in the category. The scheme is overweight on capital goods, chemicals, FMCG, hospitality, Agri, Infrastructure, and consumer durables.'Many of the portfolio's companies are under-researched or emerging players, which offers the potential for high alpha generation. The fund typically holds around 45–55 stocks, ensuring diversification without dilution of returns,' Jain told ETMutualFunds. Also Read | Planning to save Rs 10,000 monthly? Here is how much you will generate in 25 years The top 10 stocks of the fund constitute 24.66% of the total portfolio as of April 2025. Based on the last three years, the scheme has offered a Treynor ratio of 1.65 and an alpha of 0.01. The sortino ratio of the scheme was recorded at 0.54. The return due to net selectivity was recorded at (0.06), and the return due to improper diversification was recorded at 0.07 in the last three expert adds that the fund's Sharpe Ratio has consistently been higher than the category average, reinforcing its strength in managing both growth and downside risks. The investment style of the fund is to invest in growth-oriented stocks in smallcap market capitalisationApart from the SBI Small Cap Fund, there are 22 other funds in the category which have a track record of three years in the market. Among the total 23 funds in the category, Bandhan Small Cap Fund offered the highest return of 32.09% in the last three years. ITI Small Cap Fund offered the second-highest return of 29.40% in the same period. PGIM India Small Cap Fund gave the lowest return in the last three years of around 15.45%. Post the performance of the small cap fund in the last three years, Jain said that the Nifty SmallCap 250 index is running at a PE ratio of about 32.4 which is higher than the 5 years average PE range, indicating that valuations are stretched which suggests that investors should be cautious in the short term, as high valuations may limit near-term upside and increase vulnerability during market corrections. For conservative investors, Jain advises that they may choose to stay away from small-cap funds given their high volatility and current elevated valuations, and instead, they can focus on large-cap funds, which are available at attractive valuations and offer more stability in uncertain markets. On the other hand, for aggressive investors, she adds that those with a high-risk appetite and long-term horizon can consider adding small-cap funds with a proven track record to their portfolios. 'A staggered investment approach through SIPs is advisable to manage market fluctuations and reduce timing risks. While near-term caution is warranted, small-cap funds continue to offer strong long-term growth potential in India's expanding economy,' she should always choose a scheme based on risk appetite, investment horizon, and goals. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and Twitter handle.
New Indian Express
05-06-2025
- Business
- New Indian Express
Indian indices open mildly positive on Thursday
CHENNAI: Benchmark indices opened on a mildly positive note on Thursday, reflecting cautious optimism amid subdued global cues. The BSE Sensex rose by 137 points (0.17%) to hover around 81,136, while the Nifty50 inched up 38 points (0.15%) to 24,658 in early trade. The top gainers today in the opening trade under Sensex were Eternal, Power Grid, Sun Pharma, Reliance Industries, M&M, HCL Tech, Adani Ports and NTPC. While the key losers included Bajaj Finance and Bajaj Finserv, Axis Bank, Nestle India, HUL, Tata Motors and Titan. Broader Markets & Sectoral Trends Nifty MidCap 100 was up 0.36% on Thursday in the start, while Nifty SmallCap 100 rose mildly by 0.69%. Among sectoral indices, Nifty Pharma was 1.0% up, led by gains in Dr Reddy's Lab. Nifty Realty and Nifty FMCG were also up by 0.5% and 0.1% respectively.
New Indian Express
30-05-2025
- Business
- New Indian Express
Indian equity benchmarks open lower on Friday amid cautious investor sentiment
CHENNAI: Indian equity benchmarks opened lower on Friday (May 30) amid cautious investor sentiment, as market participants eye the final batch of March 2025 quarter corporate earnings and the all-important Q4FY25 GDP data due later this week. Global jitters around revived US tariff policies under former President Donald Trump added to the nervousness. Benchmark Indices BSE Sensex opened at 81,525, down 108 points or 0.13% Nifty50 was at 24,800, down 33 points or 0.13% The weakness comes despite relative strength in broader market indices and select sectors. Key Market Movers However some stocks bucked the trend and the top gainers in the early session included Adani Ports, Nestle India, L&T, Sun Pharma, Bajaj Finserv, Power Grid, and Titan. These stocks provided support to the indices with moderate gains amid selective buying. While top losers were IT heavyweights such as Infosys, HCL Tech, Tech Mahindra, and TCS, which dragged the indices lower. IndusInd Bank and Tata Steel also saw selling pressure on Friday. Broader Market & Sectoral Trend Despite the dip in frontline indices, broader markets showed resilience—an indication of ongoing rotation and stock-specific action. Nifty MidCap 100 rose slightly by 0.36%, and Nifty SmallCap 100 also gained modestly by 0.15%.
