Midcaps, smallcaps too hot; investors should have a large-cap tilt right now, says Varun Fatehpuria of Daulat Finvest

livemint.com:

Varun Fatehpuria, Founder & CEO of Daulat Finvest Private Limited says mid and small-cap segments have had a dream run this year but their valuations are at premium. He believes it is tough to see these premiums being maintained in Samvat 2080. In an interview with Mint, Fatehpuria shared his views on markets and sectors he is positive about.

Edited excerpts: The immediate short-term hang on the market right now is the course of the Israel-Hamas war. The geopolitical instability in West Asia will have a bearing on the crude prices which will impact India’s energy purchases. As the situation evolves, this is a risk that investors need to be mindful of.

Investors should also be cognizant of global recessionary fears caused by monetary tightening undertaken by central banks all across the world. Companies and sectors like IT and ITeS with significant foreign earnings are already seeing some softness in demand from their Western clients. On the domestic macro front, India remains a structural story with a strong domestic demand base.

We remain one of the few countries to have demonstrated resilient growth. Markets are also expecting political stability and have already priced in a favourable general election outcome in 2024. All of this is reflected in the broader market valuation – India continues to remain one of the most expensive markets globally.

Any re-rating in the short-to-medium term can also have an impact on investor’s returns on the downside. (Exciting news! Mint is now on WhatsApp Channels. Subscribe today and stay updated with the latest financial insights! Click here!) A lot of retail investors in the market today are sitting on mid-to-high teen returns earned over the past four to five years.