Go long, really long
₹26.78 billion and the latter at ₹20 billion, according to data released by the Association of Mutual Funds in India. These figures look robust despite a 37% and 20% decline, respectively. In contrast, large cap funds saw net outflows of ₹1.11 billion.
Broadly, greater inflows into small and mid caps are welcome, as this deepens trading in these usually less-liquid shares. But with their prices going out of reasonable proportion to their earnings, there’s a worry that risks are being ignored. That foreign portfolio investors have been cashing out lately is a warning signal.
While the Indian economy is faring well compared to most others, the earnings of companies would need to expand faster to justify inflated prices. In major market rallies and corrections, it’s typically big players that get to time entries and exits profitably. Others are best off hanging in for gains over the long haul.
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