'... with the rest split between mid and smallcaps, as valuations are becoming more attractive across segments.'
IT stocks had their worst first half fall in decades, with the Nifty IT index declining 31% in the January-June 2026 period, its biggest decline in the first six months of a calendar year since 2003.
Largecap equities are less volatile than mid- and smallcap stocks, making them suitable for risk-averse investors.
Investors now have 27 passive smallcap funds to choose from 17 index funds and 10 ETFs.
Largecap equity funds remain suitable for conservative and moderate risk-taking investors seeking relatively stable returns.
Most actively-managed equity mutual fund schemes outperformed their benchmarks despite volatility across domestic equity markets during the past year.
'The market is currently neither cheap enough to be exciting about nor expensive enough to worry about.'
Smallcap funds give investors access to businesses that can grow much faster than the broader economy.
Foreign investors have largely been exiting one part of the market while domestic investors have been enthusiastically accumulating another, points out Debashis Basu.
'Midcaps and smallcaps are the 'go-to segments' for retail investors.'
Accenture's revised annual revenue growth forecast and weaker-than-expected fourth-quarter guidance have sent shockwaves through the Indian IT sector, causing major IT stocks and the Nifty IT index to tumble significantly.
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.
Life cycle funds may suit people who are starting their investing journey. They may suit those who do not want to monitor their investments frequently. Busy professionals, beginners and delegators, who lack the time, information or interest to manage asset allocation actively, may find these funds useful.
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.
LAMF allows investors to access liquidity while staying invested.
Indian IT stocks have seen a significant decline of up to 33 per cent year-to-date in 2026, largely due to artificial intelligence (AI) disrupting traditional outsourcing models, leading analysts to predict a challenging FY27 for the sector despite some cushion from rupee depreciation.
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.
'As we navigate uncertain waters, a conservative approach to largecap investing could provide a strategic advantage.'
'In India's case, an extended earnings slowdown accompanied by rich valuations have dimmed returns since late 2024.'
Flexicap fund performance depends heavily on the fund manager's decisions.
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.
'The problem is not just slower growth, but also the quality of growth.'
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.
'The next phase of India's IPO cycle will be defined by quality, pricing discipline and investor selectivity.'
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).
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.
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.
Ask rediffGURU Reetika Sharma your insurance, mutual fund and personal finance-related questions.
'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.'
10 largecaps stocks which stand to gain from the Budget.
'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.'
'Stopping now would defeat the core purpose of an SIP, which is to average out the purchase cost over market cycles.'
Fund managers advise conservative investors to cap midcap exposure at 10 to 15 per cent of their equity portfolio.
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.
Investors seeking higher returns at relatively higher risk should consider allocation to smallcap equity funds.
