Reduce exposure in small caps, shift to large caps

FIVE-YEAR DREAM RUN OF MID AND SMALL CAPS MAY BE ON ITS LAST LEGS

- SAIKAT NEOGI

AS VALUATIONS IN mid and small-cap stocks remain elevated, investors should be cautious and temper their return expectations. They should consider increasing exposure to large-cap stocks.

Mid and small-caps are currently trading above the long-term average. These elevated levels make them more susceptible to market volatility and corrections. In November, while Nifty 50 delivered positive returns of around 2%, BSE Midcap index remained largely flat and the BSE Small cap index recorded negative returns.

Past returns due to low base