Largecap stocks could be better placed to outperform in the near term as valuations turn attractive and foreign investor flows show signs of improvement, according to Sandeep Tandon, Founder and CIO of Quant Mutual Fund, and Swarup Mohanty, Vice Chairman and CEO of Mirae Asset Mutual Fund.
The two fund industry leaders said investors should look beyond recent market trends and focus on building a balanced portfolio. They believe the recent preference for mid and smallcap stocks has left largecaps relatively under-owned, creating opportunities in some established companies.
Mohanty said largecaps are in a favourable position from a valuation perspective, with several quality businesses available at reasonable prices. He also expects corporate earnings to remain robust over the next year, supporting the case for large-cap investments.
He added, “I would put largecaps at a very good sweet spot at this moment. When I’m saying this from an industry flow perspective, the way people have bought mid and small in the last two years and completely ignored largecap from an allocation perspective, apart from their being valued well, it’s a blatant sort of call.”
Tandon also sees largecaps having an advantage in the near term, particularly as foreign institutional investors (FIIs) gradually increase their exposure to Indian equities. However, he believes mid and small caps could deliver better returns over a five-year horizon.
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On the sectoral front, Tandon is positive on power, particularly renewable energy, given the growing importance of energy security and domestic manufacturing. He also sees opportunities in generic pharmaceuticals, especially Indian companies with a strong presence in the US market. Telecom is another sector on his radar, supported by its links to data centers and consumption growth.
Mohanty, meanwhile, sees opportunities in private banks and healthcare. He believes investors should look at established companies that have corrected despite having strong balance sheets and healthy order books.
Looking further ahead, Mohanty expects manufacturing, electric vehicles, energy and defence to benefit as India’s economy moves towards its next phase of growth. He also sees opportunities in the broader IT sector.
On portfolio allocation, Mohanty said investors should maintain exposure across market capitalisations rather than follow the traditional largecap-heavy approach. He suggested building the satellite portion of the portfolio around select themes, while keeping the core allocation diversified.
Both fund managers believe the next phase of the market will reward careful stock selection rather than broad-based sector bets.
For the entire discussion, watch the accompanying video
Largecaps may outperform in new Samvat; Quant MF, Mirae Asset flag opportunities in power, healthcar
Largecaps may outperform in Samvat 2083; Quant MF, Mirae Asset see opportunities in power, healthcare