The markets have been volatile in the last 3 months. Given geopolitical tensions, rising crude oil rates and sharp price action in the rupee, investors are torn between multiple themes. But the biggest question is whether they should invest their money large caps Or midcap?
This question becomes even more relevant when one looks at the movement of major large and midcap indices. While the benchmark indices have been flat, small and midcaps have been buzzing. nifty midcap Has increased by more than 7% in the last 3 months while Nifty has fallen by less than 1%
Large Cap vs Midcap: Valuation Difference
While some market experts are betting on the valuation gap in high-confidence large caps, others are betting on high-growth opportunities in midcaps.
In our exclusive quarterly facility Leading fund managers and market experts were almost unanimous on allocating the maximum amount of their portfolio to equities, but they were divided on the share to be allocated to large caps and midcaps.
Anchor Valuation: Why valuation discount favors large caps
In terms of allocation, leading market experts are betting on the valuation gap across several major large cap counters. market leaders Ajay Bagga It was highlighted that their model portfolio is “deeply linked to India’s macro resilience.”
He believes that “Large-cap Indian equities, in particular, are presenting an attractive, cooled-down valuation environment, trading around 10% below their 7-year average P/E. This sets the stage for a powerful, large-cap ‘mean-reversion catch-up’ trade over the remainder of 2026.”
according to Deven R Choksey, Founder and MD, DRChoksey Finserv“The current quarter demands a balanced approach that combines structural growth with opportunistic positioning.”
He believes “the best is being done by deploying portfolios in margin-extended power subsidiaries, taking advantage of temporary valuation discounts in top-tier Nifty stocks, riding regulatory tailwinds with mega-banks, and preparing for the upcoming wave of institutional investment.” IPO“Investors can reliably outperform broader market benchmarks.”
Anand Shah, CIO PMS & AIF – ICICI Prudential AMC reported that although the near-term investment environment has become more challenging, they “continue to favor large caps as portfolio anchors. Exposure to mid-cap and small cap companies remains selective, with an emphasis on businesses demonstrating sustainable competitive advantages.”
Growth Bias: Structural Catalysts for Select Midcaps
This earnings is seen as a major catalyst for the markets going forward. Brijesh Ved, Head-PMS, Kotak Mahindra AMC It highlighted that “from an asset allocation perspective, the current macro backdrop supports a balanced but growth-oriented strategy for Indian investors, with equities remaining central given the strength of domestic economic drivers and long-term earnings growth.”
Within equities, he believes in “a calibrated allocation toward the middle and higher.” small cap segment This is necessary, as they are likely to disproportionately benefit from India’s relatively stable position, lower commodity and oil prices, and more reasonable valuations following recent reforms, as well as the improvement in domestic growth momentum.
Sandipan Roy, CIO – Motilal Oswal Private Wealth Confirmed the views and explained the logic leading to bias towards midcaps. “While large-cap valuations range from fair to attractive, expectations of slower growth coupled with sustained outflow pressure may limit the upside,” he said.
According to him, “middle And small cap valuations are well supported by earnings on an overall basis as companies in the segment continue to benefit from long-term themes like formalization, digitalization and India’s investment cycle. So, we are overweight in this space.”
conclusion
Overall, most market experts and fund managers are focusing on value buying with attractive entry points. While some believe this is the time to maximize large cap exposure, others are also using this opportunity to look for potential bargains in the small and midcap sector.
For a detailed quarter-by-quarter analysis of how to shape your portfolio, you can track quarterly facility But financialexpress.com.
Disclaimer: Investing in equities including large-cap, mid-cap and small-cap stocks is subject to market risks, and the allocation strategies discussed by market experts reflect their personal analytical framework rather than a fixed performance guarantee. Past index performance, valuation discounts, or earnings catalysts do not ensure future returns, and the relative volatility of the mid- and small-cap segments may differ significantly from historical trends. Readers are advised to evaluate their risk appetite and consult a SEBI-registered financial advisor before making any asset allocation decisions based on these market observations.
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