How will the midcaps and smallcaps fare this week? Shibani Sircar Kurian answers

economictimes.indiatimes.com:

Shibani Sircar Kurian, Senior EVP, Fund Manager & Head -Equity Research, Kotak Mahindra AMC, says “our belief is that in the near term, given the kind of valuation disparity that we are seeing between the broader market as well as largecap, it is possible that we will see far more volatility in the mid and smallcap segment vis-à-vis largecaps where valuations are far more reasonable. At this point in time, we would believe that at least in the near term, largecaps are better placed than midcaps and smallcaps.”

When the market fell, we saw a sharp fall in the broader markets as well and on Friday, the recovery was also led by the same segment versus the benchmark indices. What is this trend that we are seeing coming in for the broader markets? Do you think that fall we saw during the week will continue for the broader markets?
Ever since April of this year, the broader markets have led the way and have massively outperformed the largecaps or the Nifty. The way we look at the overall market construct between midcap, smallcap and largecaps is that just in terms of valuation, both the midcap as well as the smallcap indices are trading at multiples on a one-year forward basis which is significantly higher than its long-term average.

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While the largecap Nifty traded reasonable valuations on Friday. close to the long-term averages, on an absolute basis, midcaps and smallcaps have been trading at multiples which are higher than their own average levels. On a relative basis as well,