The rally in mid- and small-cap stocks has spilled over into the IT sector as well. Second and third-tier IT stocks, which historically traded at a discount to the big five IT companies, are now trading at nearly 25 per cent premium to their large-cap peers. The smaller IT companies have a price-to-earnings (P/E) multiple of nearly 38 times against the big five's current P/E multiple of around 31x.
With India's market capitalisation surpassing the $3-trillion mark, stocks across the board are adding heft. The upper limit for qualifying as a mid-cap stock -under the Securities and Exchange Board of India's (Sebi's) definition for mutual fund reclassification - has hit an all-time high of $5.4 billion. In 2013, amid the taper tantrum sell-off, it had dropped to just $1 billion, shows an analysis done by ICICI Securities.
The last time these two indexes recorded a negative performance on a calendar year basis was in CY19.
'While investors believe in India's long-term growth story and resilience amid global uncertainty, they see near-term risks around the direction of a global trade war.'
The one-year returns for equity-oriented mutual fund (MFs) schemes have largely mirrored the gains made in the secondary market. However, schemes that invest in infrastructure (infra), small-cap, and public sector undertaking (PSU) banks have emerged standout performers, with gains in excess of 100 per cent in some cases. Of the total 484 equity schemes, 353 have managed to beat the Sensex, reveals the data provided by Value Research. Around 20 have delivered returns in excess of 90 per cent and six schemes have given returns of over 100 per cent in the past one year. The S&P BSE Sensex Total Return Index (TRI) has given returns of 51 per cent in the last one year, ended October 29.
Ask rediffGURU and PF expert Nitin Narkhede your mutual fund and personal finance-related questions.
And if there are so many opportunities, why haven't they invested in them, asks Debashis Basu.
Small-cap funds have enjoyed a massive run-up over the past year. The category has turned in an average return of 109 per cent - the best-performing fund has yielded a humongous 201 per cent. Many investors, however, are concerned whether the category has turned risky after such a sharp rise.
As regards mid-caps and small-caps, analysts suggest investors buy only those stocks of those companies where there is earnings visibility for at least a few quarters and where the valuations have become reasonable.
'We would advise investors to hold on to multi-cap funds and not invest further until further clarity emerges.'
The rally in Indian mid-and smallcap indices thus far in calendar year 2024 (CY24) has been the best in class across the world, eclipsing the global FTSE benchmarks, and also out running peers from other leading world stock markets. This is despite the correction in the mid-and smallcap segments back home seen in the last few days, triggered by valuation concerns, geopolitical developments amid nervousness ahead of the July - September 2024 (Q2-FY25) corporate results season.
From the Sensex pack, Zomato jumped over 7 per cent. ICICI Bank, Mahindra & Mahindra, Tata Motors, Larsen & Toubro, Asian Paints, Titan, Kotak Mahindra Bank and State Bank of India were among the gainers. However, Bajaj Finserv, Bharti Airtel, Tech Mahindra and Reliance Industries were the laggards.
rediffGURU Vivek Lala answers your income tax and personal finance queries.
Equity mutual funds (MFs) capped a strong 2024 with near-record inflows in December. With net inflows of Rs 41,156 crore in December, the 2024 tally surged to Rs 3.9 trillion, up 144 per cent compared to 2023. The December tally, which was only slightly short of the record-high inflows of Rs 41,887 crore achieved in October 2024, was fuelled by record inflows of Rs 9,761 crore into small-cap and mid-cap funds.
Ask rediffGURU and PF and MF expert Janak Patel your mutual fund and personal finance-related questions.
Ask rediffGURU and PF expert Nitin Narkhede your mutual fund and personal finance-related questions.
Domestic passive mutual fund (MF) schemes will have to sell around Rs 1,500 crore worth of ITC Hotels shares once the demerged entity lists on the exchanges, according to estimates. Passive MF schemes - especially those tracking the Nifty 50 and Sensex - will have to offload their holdings in ITC Hotels as the stock will be excluded from the indices.
Portfolio returns, say analysts at Morgan Stanley, are more likely to be driven by bottom-up stock-picking rather than top-down macro forces.
'The bull market cycle ran for five years. It's the end of that cycle.' 'The next cycle is a down cycle, and in that down cycle, you will see the Sensex falling from their highs of around 68,000 to maybe 40,000-50,000 at the bottom of the cycle.'
For investors who missed the initial IPO frenzy, the market correction is an opportunity to selectively invest in promising names, but patience and careful evaluation remain the key.
A private school in Shimla, Himachal Pradesh, withdrew its decision to ask students to wear "kurta-pajama" and bring special food for Eid-ul-Fitr celebrations after it sparked a row with a local right-wing organization and some religious groups. The school said it was intended as a cultural learning experience and that participation was voluntary. The school also condemned attempts to misrepresent the event as religious propaganda and urged individuals to remove false and inflammatory messages on social media.
'Selling could further intensify and take the index towards 22,800-22,750 in the near-term.'
So far in September, the S&P BSE Small-cap index has gained nearly 3 per cent as compared to a modest 0.2 per cent dip in the S&P BSE Sensex.
Investors should avoid making drastic changes to their asset allocation during a market correction.
Ask rediffGURU and PF and MF expert Janak Patel your mutual fund and personal finance-related questions.
Younger investors with long investment horizons may continue their SIPs.
Global funds have pulled out Rs 1.54 trillion from domestic stocks in fiscal 2024 - 25 (FY25), the highest-ever outflow recorded so far, according to the data compiled by Business Standard. The last time the global funds exited Indian shores in droves was back in 2022, when they sold a net Rs 1.41 in the backdrop of Covid-19.
The unlocking of the economy since June led to a significant recovery in various macro, micro and high-frequency data points, resulting in the equity markets surpassing their previous lifetime highs.
Novice investors must understand that volatility is an inherent part of equity markets and learn to navigate through such phases.
The S&P BSE Small-cap index has recovered 26 per cent as compared to a 23 per cent rise in the S&P BSE Sensex.
If you redeem your investments when prices have fallen sharply, you will be selling at low prices and may make a permanent loss. On the other hand, if you remain patient and remain invested, you give your investment the time to recover, says Dwaipayan Bose
'As valuations of large-caps appeared to be out of whack, investors started lapping up quality mid-caps and small-caps, which were available at relatively comfortable valuations.'
'Allocate 30% to 35% of your equity portfolio to mid-cap funds and 10% to 15% to small-cap funds.'
Exposure to these funds should not exceed 10% to 15% of the equity portfolio and the investment horizon should be at least seven years.
Among Sensex shares, Infosys, Tata Consultancy Services, Tech Mahindra, Sun Pharmaceutical, Bajaj Finserv, HCL Technologies, Bajaj Finance, HDFC Bank, IndusInd Bank and Kotak Mahindra Bank were among the gainers. Tata Motors, PowerGrid, Axis Bank, State Bank of India, NTPC, Tata Steel and Adani Ports were the major laggards.
The underperformance comes amid liquidity concerns in the non-banking finance companies space and Essel Group default news.
From the 30-share blue-chip pack, Adani Ports dropped over 4 per cent. UltraTech Cement, Sun Pharma, IndusInd Bank, NTPC and Tata Steel were also the among the laggards. Nestle, ICICI Bank, Infosys, Tata Consultancy Services and HCL Tech were among the gainers.
Long-term investors should consider moving into smaller stocks. Rather than try to pick stocks, it makes sense to build a diversified portfolio by exposure across midcap and small caps funds, suggests Devangshu Datta.
Investors became richer by nearly Rs 8 lakh crore on Wednesday as benchmark BSE Sensex surged by 740 points amid value buying in utilities and power shares and a strong trend in global markets. The 30-share BSE Sensex surged by 740.30 points or 1.01 per cent to close at 73,730.23.
The current up move, according to analysts, closely resembles the rally post the global financial crisis in 2008-09, not just in quantum and speed, but also the way small-and mid-cap indices outperformed large-cap peers.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances