Midcap Surge: Experts decode India's growth amid global flux

economictimes.indiatimes.com:

“The correction we observed in midcap seems overdone primarily because, if you consider the index, 75% weightage is on large caps and 25% covers numerous midcaps,” says Sudip Bandyopadhyay of Inditrade Capital.

“Midcaps and smallcaps will always remain an attractive investment opportunity. They do present challenges, like liquidity. Investing in some of these smallcaps is similar to venturing into VC-backed companies – they exhibit very strong growth,” says Punita Kumar Sinha of Pacific Paradigm Advisors. Edited excerpts:

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ET Now: Tell us how clear and present you see the danger of a sharp correction in the midcaps at this point, compared to the large caps. Why do midcap valuations look as extended as this report indicates?
Punita Kumar Sinha: First of all, I believe India is undergoing a structural change as an economy. When India's GDP per capita rises, which I anticipate will happen exponentially, we cannot just limit ourselves to large cap names because there are only about 200-300 of them. Some of these midcaps will inevitably become large caps, so that universe has to expand. However, the entirety of India's story isn't reflected in just these 300 companies. Thus, midcaps and small caps will always remain an attractive investment opportunity. They do present challenges, like liquidity. Investing in some of these small caps is similar to venturing into VC-backed companies – they exhibit very strong growth. Hence, investors find these opportunities quite appealing,