Biased towards large and large midcaps in terms of incremental allocations: Gurmeet Chadha
Gurmeet Chadha, Managing Partner & CIO, Complete Circle Consultants, says “there are pockets of good businesses at 20-odd times, 50-odd times and there are pockets like EMS or some proxy defence and space names, some PSUs which have just run up because the PSUs are running up, and it is very difficult to justify such valuations. Soone has to be a little selective here because that is where the accidents are likely to happen. I would be a little more biased towards large and maybe large midcaps in terms of incremental allocations.”
The smallcap index is less than 2% away from its all-time high and there is no participation, there is no excitement, there is no euphoria; NAVs are down but the index has gone up. So, for an index which 45 days ago was supposed to be in a bubble zone, has recouped all everything it lost.
Gurmeet Chadha: That is probably the nature of the beast.
I think with a smallcap index, you can lose 6-8% in a day. We saw that in November when SEBI initiated the stress test.
Also, as a category now, the smallcap AUM is almost Rs 2.5 lakh crore. In fact, some of the large funds like Nippon or SBI are individually like Rs 30,000-40,000 crore each.
My sense is, there are a lot of pockets where we are unable to justify valuations but in a bull market, you stand to be humbled by the market.
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