Jigar Mistry outlines key sectors with potential value in a volatile market environment
«We now have more smallcap folios than largecap. The aum for smallcap and largecap indices is almost alike and they are buying the same illiquid stock which is creating this very large dislocation. How does this unwind?,» says Jigar Mistry, Co-Founder, Buoyant Capital.
Help us with your take and your outlook for the Indian markets for 2025 because 2024 has been a very interesting one, but 2025 a lot of these key drivers could be there, there could be rate cuts, the new us president-elect will be there. So, what is your outlook and expectation from the Indian markets?
Jigar Mistry: We need to take a step back from the overall equity experience that we seem to be having. If you look at your over a 5 or 10-year rolling returns, the EPS growth and the share price growth at the index level largecap or smallcap or at the stocks with long enough history it has always aligned. The current observation, however, suggests that especially in the smallcap space you are seeing a huge dislocation which is something that has not really happened before.
We are in the 99th percentile of the observation. So, if I give you some numbers, over the past the five-year rolling return for the largecap index the earnings growth is tracking at around 19% whereas the share price is also tracking at around 19%.
However, if you look at the smallcap index, the numbers are 17% earnings growth and roughly 34% share price growth. One of the reasons why we think this is happening because if I take say November last year, November 2023, two events
