'... with the rest split between mid and smallcaps, as valuations are becoming more attractive across segments.'
Largecap equities are less volatile than mid- and smallcap stocks, making them suitable for risk-averse investors.
Largecap equity funds remain suitable for conservative and moderate risk-taking investors seeking relatively stable returns.
Amidst a sharp run-up in gold and silver prices, investors are advised to rebalance their portfolios by booking partial profits in precious metals and reallocating to domestic equities and debt, according to financial experts.
Despite geopolitical tensions and FII outflows, Indian small and midcap stocks have not only recovered losses but are also outperforming largecap indices, driven by attractive valuations, domestic institutional support, and a rebound in earnings.
Indian stock markets rallied in early trade after US President Donald Trump announced a halt to planned military strikes on Iran, citing requests from Gulf leaders and ongoing "very big discussions" that could lead to a deal. This de-escalation, coupled with foreign fund inflows and gains in IT and Adani group stocks, contributed to the positive market sentiment. Track Sensex and Nifty on May 19, 2026.
Investors can begin investing in mutual funds with as little as Rs 100.
'In India's case, an extended earnings slowdown accompanied by rich valuations have dimmed returns since late 2024.'
Infosys shares experienced a significant drop, hitting a 52-week low, after the company announced its Q4FY26 results and provided a modest revenue growth guidance of 1.5-3.5 per cent in constant currency for FY27, falling below market expectations and raising concerns about AI-led deflation and margin pressures.
'As re-industrialisation gathers pace across regions like Asia, Europe and the US, a wide range of products and inputs will see demand.'
Net inflows into equity mutual fund schemes moderated in FY26, falling by 27 per cent to about 3 trillion till February, as choppy markets and global uncertainties prompted investors to shift towards safer options like hybrid funds and gold ETFs.
Flexicap fund performance depends heavily on the fund manager's decisions.
'The problem is not just slower growth, but also the quality of growth.'
'The next phase of India's IPO cycle will be defined by quality, pricing discipline and investor selectivity.'
'As we navigate uncertain waters, a conservative approach to largecap investing could provide a strategic advantage.'
Passive funds have resumed gaining ground in the mutual fund (MF) industry after a slowdown in 2024, with their share of assets under management (AUM) reaching an all-time high in 2025. The surge has been driven largely by robust inflows into gold and silver exchange-traded funds (ETFs).
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Global risks include a potential delay in the US-India trade agreement, the possibility of a sharp correction in US equity markets, and renewed geopolitical tensions.
The India-US trade deal has offered a much-needed breather for the Indian information technology (IT) industry, which has been grappling with global macroeconomic uncertainty and subdued client spending over the past few years.
Passive funds tracking the National Stock Exchange Nifty Next 50 Index have seen their assets under management (AUM) more than double in the past year. The index's growing popularity can be attributed to its robust 50 per cent return over the same period. Currently, the AUM of funds tracking the Nifty Next 50 index stands at nearly Rs 30,000 crore.
The majority of active largecap funds are set to outperform for the second year in a row in 2024, thanks to the strong performance of their midcap and smallcap allocations.
Most first-time investors may be better served by diversified options such as flexicap or multi-cap funds, which already hold pharma and healthcare stocks.
'The bigger unknown remains global geopolitics, which is inherently unpredictable, including developments in our neighbourhood.' 'Another concern is the increasing tilt of government finances towards welfare subsidies, especially at the state level.' 'This could constrain capital expenditure, which is critical for long-term growth.'
Fund managers advise conservative investors to cap midcap exposure at 10 to 15 per cent of their equity portfolio.
The market capitalisation (mcap) cutoff to qualify for mutual funds' (MFs') largecap universe is likely to go up for the fifth consecutive time to touch the Rs 1 trillion mark for the first time. A fresh list of largecap, midcap, and smallcap stocks is set to be released by the Association of Mutual Funds in India (Amfi) in the first week of January.
'Stopping now would defeat the core purpose of an SIP, which is to average out the purchase cost over market cycles.'
Investors seeking higher returns at relatively higher risk should consider allocation to smallcap equity funds.
Shares of Reliance Industries Limited (RIL) tumbled on Tuesday, posting its biggest single-day decline in 19 months, amid controversy over its purchase of Russian oil and profit-booking after recent gains.
'The volatility in the stock markets since September 2024 has hurt the pace of accretion of new investors.'
Worries about global politics and trade are pulling the Nifty 50 down. Experts say the market could drop further low.
2025 marked a shift in investor preference when it comes to MF schemes.
The 2025 contraction marks the steepest decline in both the number of billionaire promoters and their aggregate wealth since 2012.
10 largecaps stocks which stand to gain from the Budget.
Investing in gold trumped most other asset classes in terms of compounded annualised returns over the long term, suggests a report by FundsIndia.
Despite trailing the benchmark Nifty 50, small and midcap (SMID) stocks appear pricey on a 12-month forward price-to-earnings (P/E) basis. The Nifty trades at roughly 21x forward earnings, compared with around 28x for both the Nifty Smallcap 100 and Nifty Midcap 100 indices.
'Auto, pharma, and industrials have delivered well in the recent quarter, while businesses like quick-service restaurants, consumer staples, and durables have underperformed in volume growth.'
The Reserve Bank of India (RBI) on Friday delivered a 25 basis point (bps) repo rate cut analysts expected, driven by the strong 8.2 per cent GDP growth in the September quarter. However, analysts do not expect a runaway market rally as the impact of US tariffs continues.
Multi-asset allocation funds (MAAFs) have emerged as strong performers among mutual funds (MFs), rivalling medium-term returns from traditional equity categories while maintaining a lower risk profile. Over the past three years, average returns for this segment have surpassed those of flexicap and largecap funds, for both lump sum and systematic investment plan (SIP) investments.
Fund managers are divided on the prospects for beaten-down information technology (IT) stocks, reflected in the wide variance in equity mutual funds' (MFs) sector exposure. An analysis by Nuvama Alternative & Quantitative Research shows that while six large fund houses were overweight the sector relative to its weight in the Nifty 200 index, five were underweight as of October 2025. UTI MF had the highest exposure at 17.8 per cent, while SBI MF sat at the bottom with 5 per cent.
Unless the primary market momentum slows, smallcap stocks will stay subdued.
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