"Banks may be underperforming due to investors wanting to see how new management functions, while IT companies benefit from new leaders bringing in business relationships. We have consumer tech and fintech companies in our portfolios and there is expectation of growth and better margins as they transition to profitability. The pharmaceuticals sector is overvalued."
The value of FII holding in stocks that are part of the BSE Midcap index increased by a sharp Rs 1.8 lakh crore sequentially in the quarter ended June, data analysed by ETMarkets showed.
"Post covid, many mid-small cap companies have reported improvement in their operating performance coupled with leaner balance sheets. This has led to improved interest from investors esp. domestic players. Other than MFs and retail which regularly invest in mid-small companies, other investment managers such as PMS, AIFs, family offices, and HNIs are also actively participating in this space."
Mutual funds having exposure purely to small cap stocks have seen inflows of Rs 19,784 crore in six months ended July which is nearly double from the inflows seen in midcap funds at Rs 10,304 crore. In contrast, largecap funds have been at the receiving end of investors ire with outflows of Rs 3,974.10 crore.
"Most of us generally say mid and smallcap in the same sentence. But they are two very diverse groups. The largest smallcap is now about Rs 17,000 crore. Five years back, it was just Rs 8,200 crore. So, smallcap as an English word is hiding more than it is saying because it was called small cap then, it is called smallcap now but Rs 17,000-crore businesses being called smallcap is something which hit me harder when I was actually doing the math."