Small- and mid-cap funds have huge returns, but also come with risks Analysts say small-cap and mid-cap companies are attracting investors because of India’s fast growth, funding opportunities and government support.
“The reason for this interest is that India is growing at the fastest pace so far. Not only the investors, but the common man is also very interested in the growth of the country. Eventually this growth is empowering small and mid-cap companies. Huge government funding and opportunities are fueling the growth of small and mid-cap companies,” said Arun Singh Tanwar, Founder and Chief Executive Officer, Get Together Finance (GTF).
With good confidence, surplus funding, and strong finances, small and mid-cap companies are worth betting on the stock market, suggested Arun Singh Tanwar.
The interest in mid-cap and small-cap stocks reflects India’s strong corporate earnings. Despite uncertain macroeconomic conditions, a selective investment strategy in areas with strong earnings resilience is recommended for medium-term investors.
“We think the growing interest among investors in mid-cap and small-cap stocks reflects the broad-based strength of India’s corporate earnings in recent years. Looking ahead, although short-term macroeconomic conditions may be uncertain due to factors such as upcoming national elections and global yield-related volatility, we believe that a selective investment strategy should be adopted in mid-cap and stocks, focusing on areas strong earnings. resilience, the prudent approach for medium-term investors,” said Trideep Bhattacharya, CIO-Equities, Edelweiss MF.
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India is one of the fastest growing economies. Investors believe that small-cap, mid-cap and theme funds are a good bet for the future because of the growing investor base, increasing market share and revenue, and the potential for capacity expansion in small companies.
“In terms of market share and revenue, the mid-cap and small-cap space have a low base and are growing at a faster rate than large-cap companies with a high base. Old government and private caps are picking up space and small companies have the ability to increase capacity 2x or 3x at a much faster pace than any larger company because they have a very large base. In summary, the investor base of these businesses is growing in line with capacity expansion and they are favored by a low shareholder base,” said Mukesh Kochar, National Head of Wealth at AUM Capital.
Disclaimer: The opinions and recommendations made above are the opinions of individual analysts, and not those of Mint. We encourage investors to check with certified experts before making any investment decision.
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Updated: 03 November 2023, 01:36 PM IST
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