Not the whole mid, smallcap segment is expensive; positive about realty sector, says Mihir Vora of TRUST Mutual Fund

Mihir Vora, Chief Investment Officer, TRUST Mutual Fund. In an interview with Mint, Vora shared his views on markets and the sectors he is positive about. Edited excerpts: We’ve had a dream run in the markets over the past eight years.

Since the inception of the Sensex in 1979, the longest run of back-to-back positive years has been seven years – from 1988 to 1994. In 2023, we are in the eighth year of positive returns. So, if we end the year at current levels, it will be a new record streak.

In the very short term, we will continue to see volatility, mostly due to global factors but local corporates are doing well, with 15-20 per cent earnings growth. With the recent downtick in US bond yields, if the market sees the peak of tightening past us, then there could be a year-end risk-on rally. December usually tends to be quiet as most international fund managers will be on a break.

Some mid and small-cap stocks may have run a bit too far, but that need not mean that the whole segment is expensive as within mid-caps and small-caps there are significant variations in valuations. Mid-cap and small-cap space will always be a stock pickers’ playground. This is because most of the exciting sectors where we expect high growth are represented only in the mid and small space.

Sectors and sub-sectors like capital goods, defence, railways capex, electronics and durable manufacturing, construction, renewable power, power transmission and distribution, China-plus-one theme play, beneficiaries of the production-linked schemes, chemical and pharma companies, etc., are mostly represented only in the mid and small-cap space. We can expect more support for the lower-income segments in the next few months. It may be populistic but is