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Time of India
11-07-2025
- Business
- Time of India
Investors' pour Rs 47,000 crore in midcap & smallcap mutual funds in H1 CY25. What are they really chasing?
Midcap and smallcap mutual funds attract significant investor interest. These funds received Rs 47,000 crore in the first half of the year. Experts advise caution due to high valuations. They suggest a longer investment horizon. Investors should also prepare for potential volatility. A staggered investment approach is recommended. Focus on long-term asset allocation and risk profile is crucial. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads With investors' showing clear preference for midcap and smallcap mutual funds by pouring Rs 47,000 crore in the first half of the current calendar year and the categories offering good returns , market experts are of the view that these inflows have been driven by higher trailing returns in recent years, and the fear of missing out (FOMO) may also be pushing investors to chase past performance 'These returns may not always be backed by sustainable earnings growth and other fundamentals of the underlying companies and thus investors may need to be cautious. Also, past returns can result in mis-selling and pushing such funds easily to retail investors,' Vishal Dhawan, CEO, Plan Ahead Wealth Advisors, a wealth management firm in Mumbai told this as a concern, Dhawan mentioned that the current valuations in mid and small caps are well above historical averages, leaving little margin for error if earnings disappoint and also, based on trailing returns investors may enter with high return expectations, only to be disappointed if the segment underperforms or the first half of the current calendar year, mid cap funds received a total inflow of Rs 21,870 crore whereas small cap funds received an inflow of Rs 24,774 crore in the same expert cautions investors that they should invest in mid and small caps only with a slightly longer-term horizon compared to largecaps and also be ready with slightly higher volatility given that these segments are trading at a higher valuation.'We are not negative on mid and smallcaps. So, we are just saying that if you are coming into mid and smallcap strategies, please do come with a slightly longer-term horizon compared to largecaps and also be ready with slightly higher volatility given that they are trading at a higher valuation and that is what our view has been,' Harsha Upadhyaya, CIO-Equity, Kotak AMC told the categories are currently trading at a higher valuation and are receiving heavy inflows, Dhawan mentioned that investors often fall prey to herd mentality, chasing recent winners like small and mid-cap funds assuming past returns will be replicated in the future, the current forward valuations in the small and mid-cap space are still significantly above their long-term averages, therefore this space lacks valuation comfort, and these segments are more volatile and sensitive to earnings disappointments or any weak on one's risk appetite and investment horizon, allocation to small and mid-cap funds can range between 10% to 30% of the portfolio and the large-cap segment offers more reasonable valuations currently and can be a major part of the portfolio providing stability and downside protection, is what Dhawan midcap and smallcap funds have been on the lower side of the return chart in the current calendar year so far (till June 30) but since April's low, mid cap funds have gained 20% and small caps have gained nearly 21%.On April 7 the benchmark index was at the level of 73,137, the lowest in the current financial year so looking at the recent inflow trend, returns offered, and recent valuations in the mid cap and small cap categories, Dhawan recommends investors that a staggered investment approach through SIP or STP is wiser than a selective exposure to mid and smallcap funds can still be beneficial for long-term goals, it's crucial to limit allocation based on risk profile and focus on consistent, disciplined investing rather than timing the market and selective allocation, backed by earnings visibility and reasonable valuations, may be key to navigating this space wisely, Dhawan investors tend to follow the inflow trend and invest where others are investing and putting their money and the categories which are delivering high returns, which deviates them from their asset allocation and risk profile. Many experts always advise choosing a fund based on their risk appetite, investment horizon and goals and follow the addition to this, Dhawan recommends that chasing inflow trends is never a wise strategy, such moves are often driven by FOMO, leading investors to enter at peak valuations and see downsides during corrections and inflows are not a reliable indicator for making investment adds that focusing on the long-term asset allocation and risk profile ensures that the portfolio is aligned with the goals and capacity to handle volatility.'Staying disciplined avoids emotional, peer driven decisions and encourages better rebalancing and long-term wealth creation. A diversified approach offers far more stability than trend-chasing, especially in uncertain market phases,' Dhawan analysing the recent flow of returns and categories receiving inflows, Dhawan is of the opinion that the outlook for mid and small-cap funds remains cautious and the future performance will be driven by earnings growth of the underlying businesses, which will indicate whether the current high valuations are justified by actual earnings and business growth.'While long-term structural tailwinds remain fine, near-term corrections cannot be ruled out due to elevated valuations and recent developments such as geopolitical tensions, trade tariffs, and Wars,' he adds.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Time of India
10-07-2025
- Business
- Time of India
Get into mid and smallcaps with a slightly longer-term horizon compared to largecaps: Harsha Upadhyaya
Harsha Upadhyaya , CIO-Equity, Kotak AMC , says the investment strategy will be more stock-specific and bottom-up, with potentially increased large-cap positions due to relative valuations. While not negative on mid and small-caps, investors should have a longer-term horizon and be prepared for higher volatility . This is because mid and small-caps are trading at higher valuations compared to large-caps. On the broader end of the market, are you liking any particular sectors or stocks? Do you believe that now is the time for the largecaps to take the lead ahead for the markets or do you believe that there is some value on the broader end? Harsha Upadhyaya: The broader end continues to be at a valuation level which is higher than historical levels and higher than largecaps for quite some time now. Although, we did see more volatility in that bucket maybe at the beginning of the calendar year, but post that, we have seen the broader end doing much better than largecaps. So, to that extent, from a pure valuation perspective, there is no sectoral pick in that end of the market. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now Undo We would be more stock specific and bottom-up in terms of our evaluation and wherever we can take slightly higher largecap positions in some of the funds that we have been doing. That is broadly in view of the relative valuations that are there between largecaps and non-largecaps. Otherwise, we are not negative on mid and smallcaps . So, if you are coming into mid and smallcap strategies, please come with a slightly longer-term horizon compared to largecaps and also be ready with slightly higher volatility given that they are trading at a higher valuation and that is what our view has been. Let us look at the current setup where inflation is down, crude is down, dollar is down, and yields are also down. These are classic indicators that macro trade should do well. So, are we in for a macro outperformance which is banks, NBFCs, interest rate sensitives? Harsha Upadhyaya: Looks like that and financials have been outperforming for the last couple of quarters, but not by a wide margin. We may not have seen very large absolute numbers from that portion of the market simply because markets have gone nowhere. But clearly, there has been an outperformance and we believe that segment will continue to do well and over a period of time, that outperformance will increase and become more visible given that we expect improvement in credit growth over the next 12 to 18 months. I was going through your fact sheet and it is quite intriguing to know that the way to play defence according to you is via aerospace. What is it that you find interesting about this pocket and if you can identify some themes or companies within that? Harsha Upadhyaya: We have been very positive on defence for quite some time now and we started building our positions when the government started to focus on indigenization and also larger investments continue to happen into defence. Given that the geopolitical issues are so significant and most of the economies, most of the regions are looking to spend more on defence, clearly we will continue to see higher level of investments going into defence not just in India, but also in other countries. Live Events You Might Also Like: Overweight on domestic businesses; modest earnings growth pickup likely in H2: Harsha Upadhyaya For Indian defence manufacturers, the opportunity is two-fold; one, they can continue to cater to Indian demand and also at some point of time, there will be export opportunities and that is something that we have been very keenly watching. While valuations are on the higher side, we are not increasing our position at this point of time but everything that is focused on aerospace, electronics, etc, and also explosives, which is going to be needed across the board whenever there is a geopolitical issue and a war, are the segments within defence where we have positions and continue to believe that over the medium to long term, this will continue to outperform; However, in the short term, the valuations are on the higher side and one needs to have a little bit of caution. The earning season is just around the corner. We are right there. What are you expecting for earnings this time around? Do you believe that we could do better than last quarter because expectations this time around too are rather tempered? Harsha Upadhyaya : It is unlikely to be anything very exciting, but maybe marginally better than the fourth quarter of last financial year is what we can expect. We believe that in the first two quarters of this financial year, we will be somewhere in the mid to high single digit in terms of earnings growth on Nifty basket and eventually in the second half, they should improve to slightly better numbers and move into double digits. Thereby the overall full year may see 10-11% year-on-year growth. If you are sequentially looking at it, maybe there will be slightly better numbers this quarter, but I do not think that is going to excite the markets in a big way. In the light of no expectations from the earning season, a lot of paper supply, can we say that we should expect a downward bias now? In the next two quarters, there are no triggers, and everyone knows which way inflation is moving, which way tariffs are moving. If demand is coming back from FIIs, supply is coming from promoters. Are we in for a nothing sort of a market or a very low return patch now? Harsha Upadhyaya : Frankly, the last six months have also been more of that nature and that could continue for another couple of quarters. Once there is a little bit of confidence on the earnings trend improving or credit growth improving, that is probably when you will see more legs for the market. Having said that, market volumes at this point of time have not been significant. So, to that extent, any of the liquidity events can drive markets one way or the other, and that is something one needs to keep in mind. You Might Also Like: Betting on consumption? Put 70-75% in discretionary & 20-30% in staples: Gurmeet Chadha
Mint
05-07-2025
- Business
- Mint
Stock market this week: Top gainers and losers you should watch closely
India's Goods and Services Tax (GST) collections for June 2025 stood at an impressive ₹ 1.85 lakh crore, marking a 6.2% year-on-year growth and highlighting the continued strength and resilience of the Indian economy. This consistent increase in GST revenue reflects robust business activity, healthy consumer demand, and growing tax compliance across sectors. Strong collections support the government's fiscal plans and reinforce confidence in India's formal economy. The GST system continues to mature, contributing significantly to India's overall revenue framework while simplifying tax structures and improving transparency. Monthly revenue above ₹ 1.80 lakh crore for June indicates sustained momentum in manufacturing, services, and consumption-led sectors. This steady performance showcases the government's ongoing efforts to streamline tax administration and strengthen compliance, ultimately aiding infrastructure development and public welfare initiatives. The positive trend in GST collections reinforces optimism about India's economic outlook and growth trajectory in the months ahead. The Initial Public Offering (IPO) of Crizac Limited received an overwhelming response from investors, being oversubscribed by an impressive 62.89 times. This strong demand reflects investor confidence in the company's growth potential, business fundamentals, and long-term vision. The enthusiastic participation was witnessed across all investor categories, including retail, institutional, and non-institutional buyers, showcasing broad-based interest in the offering. Such high subscription levels highlight Crizac Limited's strong market appeal and the positive sentiment surrounding its public debut. The company's strategic positioning, innovative offerings, and track record in its sector have attracted attention from investors looking for value and future growth. The success of this IPO not only reflects optimism in the company's prospects but also reinforces the strength and vibrancy of India's capital markets. Crizac Limited's journey as a listed entity is now set to begin on a promising note, backed by a strong base of supportive stakeholders. Kotak AMC, 360 One AMC, HDFC AMC, and ICICI AMC have introduced exciting new fund offerings (NFOs), providing investors with diversified opportunities aligned with various financial goals. Kotak AMC has launched the Kotak Nifty AAA Bond Financial Services Mar 2028 Index Growth Direct Plan, offering exposure to high-rated financial sector bonds with a defined maturity, ideal for conservative investors seeking stable returns. 360 One AMC brings the 360 One Overnight Growth Direct Plan, a low-risk option for short-term parking of funds with overnight liquidity benefits. HDFC AMC introduces the HDFC Innovation Growth Direct Plan, focusing on innovation-driven companies with long-term growth potential, perfect for investors looking to tap into forward-looking sectors. Meanwhile, ICICI AMC offers the ICICI Prudential Nifty Private Bank Index Growth Direct Plan, allowing investors to gain targeted exposure to India's leading private banks. These NFOs present diverse choices across debt, innovation, and sector-based themes, catering to various investment preferences. Index Returns Best Performers Worst Performers Bought and Sold Most Watchlisted Kuvera is a free direct mutual fund investing platform. Unless otherwise stated data sourced from BSE, NSE and kuvera.
Economic Times
01-07-2025
- Business
- Economic Times
Rs 72 lakh crore stock market boom flashes valuation warning. Where's the smart money going?
Live Events Which sectors to invest in? (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel India's equity benchmark Sensex has rocketed an extraordinary 12,000 points in less than three months in a Rs 72 lakh crore rally, leaving cash-sitting investors nursing deep regrets as domestic and foreign money floods into stocks ahead of critical trigger points including Trump's July 9 tariff deadline and the looming Q1 earnings blistering 17% surge from April 7's low of 71,425 has propelled markets to near all-time high once again, with the Sensex and Nifty rallying for four consecutive months as domestic institutional investors splurged Rs 3.5 lakh crore while foreign institutional investors turned net buyers across all three months. During the period, the combined market capitalization of all BSE-listed stocks has soared by Rs 72 lakh crore to Rs 461 lakh crore."We believe this is basically running on liquidity," warns Venkatesh Balasubramaniam of JM Financial Institutional Securities. "Domestic flows have been very strong with monthly SIP numbers over Rs 26,000 crore per month. Since March onwards, FII inflows have turned positive. Definitely this is running on flows." Besides, mutual funds have been sitting on large amounts of cash with May month's pile at Rs 2.17 lakh relentless money flow has created a dangerous disconnect between valuations and fundamentals, with analysts cautioning that all market segments, large caps, mid caps, and small caps, are now trading at one standard deviation or more above their mean the euphoria, seasoned market watchers are sounding alarm bells about stretched valuations and the need for moderated expectations ahead of the tariff deadline and earnings season."The first and foremost recommendation to investors is to moderate return expectations," cautions Nilesh Shah, MD of Kotak AMC. "Last five years returns are unlikely to be repeated in the next two to three years. Markets are fairly valued or a little bit over fairly valued, and re-rating is unlikely, which means returns will be linked with earnings growth likely in high single digit, low double digit."Shah advocates diversification beyond equities: "Outside of equity, there are asset classes—REITs, InvITs, debt mutual funds, performing credit, AIFs, precious metals, index or ETFs. Please maintain your asset allocation across debt, equity, commodity, and real estate. Do not put everything in equity."History, however, appears to favor continued gains entering July, with the month delivering positive returns in nine of the last 10 years and an average gain of 3.6%. Recent July performances include 2024's 3.92% return and 2023's 2.94% gain, reinforcing the month's bullish Reserve Bank of India's aggressive monetary support through recent rate cuts and a surprise CRR reduction has turbocharged domestic liquidity, with financials emerging as the top beneficiary sector."Lower interest rates are helping banks and NBFCs. Credit growth remains strong, and asset quality is stable," notes Krishna Appala of Capitalmind PMS, highlighting financials as a constructive outlook Jonagadla of Quantace Research sees particular opportunity in infrastructure financiers: "Lower policy rates and relaxed provisioning norms boost credit growth. PFC and REC leapt ~4% when the RBI's new rules landed, and PSU-bank indices hit six-month highs."While capex and financials have led the recovery, Mihir Vora of TRUST Mutual Fund notes that "in financials, we have seen capital market plays doing well but banks and NBFCs have lagged" and could now start stocks, which have lagged significantly year-to-date, are attracting contrarian interest as valuations turn attractive and fundamentals show signs of improvement."One can keep an eye on the IT sector which has not performed particularly well year-to-date," advises Atul Bhole of Kotak Mutual Fund. "After every major technology adoption, Indian vendors have actually experienced more volume of work. Large-caps are trading at relatively reasonable valuations and provide dividend yield support of 2-2.5%."The sector's appeal is enhanced by expectations of a normal business cycle returning, with Bhole noting that "assuming normal business cycle returning, IT spends can come back" as concerns over US economy and AI-led disruption may be chemical sector is attracting contrarian interest after enduring a brutal two-year downcycle, with early signs of price stabilization offering hope for revival."The persistent price fall of 2 years seems to be over and prices are stabilizing now. There are initial hopes for revival by companies," notes Bhole. "Companies are continuously investing behind products, client engagements and facilities. It may need some more patience, but provides a good opportunity to accumulate select chemical stocks."However, export-oriented pharma and chemicals could face headwinds amid U.S. tariff uncertainty, requiring selective stock picking within the sectors that have lagged the broader rally are now showing signs of life as domestic demand improves and policy support continues."Consumer discretionary segments like automobiles (two-wheelers as well as four-wheelers), white goods have lagged and can now start performing," highlights Vora, noting improving rural demand and steady urban sees opportunity in consumption broadly: "Rural demand is improving, and urban consumption is steady. FMCG, two-wheelers, and discretionary segments are showing healthy trends."In manufacturing and industrials, government capital expenditure remains high with the PLI scheme supporting domestic production. "Infrastructure and capital goods companies are seeing strong demand," notes Appala, with Jonagadla adding that "order books are overflowing—L&T reported a record ₹1 trillion intake in Q4 FY25."While defence remains a compelling long-term theme, recent sharp rallies have made valuations prohibitive for fresh investments."We continue to like defence as a long-term theme. However, after a sharp rally and expensive valuations, we are cautious on adding fresh exposure at current levels," warns markets navigate Trump's July 9 tariff deadline and Q1 earnings season, the consensus points toward continued upside potential despite elevated valuations."While valuations are elevated in parts, the broader context remains supportive," argues Vora. "Earnings are coming through, liquidity is abundant, and policy remains growth-focused. The uptrend looks sustainable, though we do expect pockets of volatility."The key for investors lies in selective positioning across financials, underperforming IT stocks, recovering chemicals, and domestic consumption plays while maintaining diversified portfolios as the liquidity-driven rally seeks fundamental validation.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Economic Times
30-06-2025
- Business
- Economic Times
Volatility ahead, but long-term investors can sleep through it: Nilesh Shah
"Indian equity markets are going up because compared to other emerging markets, we look far better. Our earnings growth over next three-five years is likely to be in high single digit, low double digit. So, my recommendation is that if you are taking a longer-term view, then yes, there is no need to worry about this volatility. There will be nightmares. But if you sleep throughout, then you will have a happy ending, you will have a happy sleep," says Nilesh Shah, MD, Kotak AMC. ADVERTISEMENT We are talking to you at a time when you look here, look there, look down, look up, everything seems to be at an all-time high. Gold, silver, US equities, Indian equities, NAV of Kotak Mutual Funds, everything is at an all-time high. Nilesh Shah: Yes, we are in a Goldilocks scenario where courtesy central banks printing money over the years have created a scenario where all asset classes are nearly all-time high. They say too much of good news and too much of happy days do not last for long. So, is this like a dream and we would be shaking up or this is going to be long dream which will keep us happy for next few years. Nilesh Shah: So, difficult to say in a very uncertain geopolitical environment. If we see all around us, events are happening at a pace and a scale which is very-very difficult to figure out. There is no way we can position our portfolio for every global event happening. If we take a longer-term view, the drivers for different asset classes are totally different. Gold is going up because central banks are buying gold to diversify their dollar reserves. Indian equity markets are going up because compared to other emerging markets, we look far better. Our earnings growth over next three-five years is likely to be in high single digit, low double digit. So, my recommendation is that if you are taking a longer-term view, then yes, there is no need to worry about this volatility. There will be nightmares. But if you sleep throughout, then you will have a happy ending, you will have a happy sleep. Absolutely and I guess one does not have to wait too long for the first litmus test, at least the earnings are soon going to be knocking on the corners. But where is it that you are anticipating pockets of outperformance this earning season and where do you think underperformance is going to persist? Nilesh Shah: So, purely from expectation point of view, we believe some of the midcap IT companies will be able to outperform expectations. Now, please do not confuse numbers with the expectation. If a bad number is factored in and you deliver better than that, it will still be outperformance. Consumer discretionary, consumer durable is one space where we could see against earnings beating expectations. ADVERTISEMENT Banking and financial services on a selective basis we should see earnings beating expectations. The disappointment probably is going to happen more on a stock specific thing rather than sector specific thing. Albeit real estate seems to be slowing down. The top end of the real estate is still continuing, but the mid and bottom end seems to be slowing down. So, there could be some earnings disappointment over there. Correlated to that sectors which are very-very competitive, for example, paints there could be earnings disappointment. ADVERTISEMENT Commodities on a higher base may deliver slightly lower than expected earnings. So, it is not likely to be large outperformance, large underperformance. It is likely to be rangebound earnings. But earnings is one key thing that the markets will be watching out for, but other than that 9th of July that is the deadline for the tariff that Donald Trump has set and everybody is watching out for that. Give us some sense that how do you see the markets approaching this particular deadline because it is not just the Indian markets that are doing well, but US markets they also sitting at an all-time high levels. Do you believe that some nervousness can kick in as we approach that date? Nilesh Shah: So, it is very difficult to figure out what Mr Trump is up to. Don ko samajhna mushkil hi nahin, namumkin bhi hai. And markets by now would have surrendered, will rather wait for announcements and then react, then actually start expecting and then reacting. In some sense, baagh aaya, baagh aaya story is getting repeated. Time and again the backtracking of announcements, backtracking of steps announced is probably convincing markets that it is better to react once steps are announced rather than in anticipation of the same. ADVERTISEMENT But also just wanted to have your take on back home. When it comes to the Indian markets, you have given your take on IT as well as BFSI. But what about some of the other sectors wherein because of this whole tariff chatter, some of the export related sectors, be it speciality chemicals, pharma, these were actually beaten down names back then. Do you believe now is the time to once again look forward to those counters, any valuation comfort wherein you find in some of these export related sectors. Nilesh Shah: So, I believe both chemical and pharma are sector to accumulate. On the chemical side, we had capacities and we had capabilities. The Chinese competition was hurting our margin and which is why operating leverage went against chemical sector. Now with tariffs, China plus one coming into play, our chemical companies' capacity utilization is going up. Operating leverage is coming back and suddenly they are able to deliver better than expected result. We saw that in March 25 quarter. We expect that to continue in June 25 and onwards quarter. In terms of pharma, Indian generic pharma provides about 40% of generic drugs consumed by Americans and that cost them about 10% of their medical budget. So, undoubtedly, it is a very-very cheap provision. We have seen that in some of the critical generic medicines, stock levels are running low and clearly US would not like to disturb that equilibrium. ADVERTISEMENT More importantly on this generic medicines because there is oligopoly in US distribution, a large portion of profit is kept by the distributors rather than the manufacturers. Even if there will be levy of tariff which we believe is not the front case, the distribution margin will be hurt far more than the manufacturing margin. Overall, we still believe Indian pharma companies is an opportunity to accumulate just like chemical sector.
