Small and mid caps outperforming large caps in the past 12 months despite recent downturn
New Delhi, March 20 (IANS) Despite recent challenges in the market, small caps have yielded no returns in the past 90 days, and mid caps have experienced corrections. However, Anand Rathi Share and Stock Brokers reported that over the past 12 months, mid and small caps have outperformed large caps, with returns exceeding 50 per cent.
According to the brokerage firm, the positive outlook for mid and small cap indices remains strong, despite skepticism from market experts. The recent surge in performance is seen as a catch-up from previous underperformance in 2018-19, indicating a historical trend of mid and small caps outperforming large caps.
The growth in mid and small caps can be attributed to substantial earnings growth, with Compound Annual Growth Rates (CAGR) of 30 per cent and 37 per cent since 2018, compared to 16 per cent for large caps. The brokerage also noted that valuations do not seem frothy despite a decrease in the risk-free interest rate.
While a small market correction is possible in the short term, the brokerage does not foresee significant market corrections. Both Foreign Institutional Investor (FII) and Mutual Fund (MF) flows into equities remain robust, but certain actions and statements from experts have slightly impacted market sentiments negatively.
Overall, Anand Rathi Share and Stock Brokers remain optimistic about the performance of mid and small cap indices, citing historical trends and strong earnings growth as indicators of continued success in the market.
–IANS
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