There is no risk to rally in smallcaps and broadcaps for now: Bino Pathiparampil, Elara Securities

economictimes.indiatimes.com:

Bino Pathiparampil of Elara Capital, says: “We have identified the cheapest stocks on a PEG basis and from among them, we have identified a few lists of stocks, which potentially look pretty attractive. Those include among the midcaps – Power Finance Corporation, Samvardhana Motherson, NHPC; among pharma names, Lupin and Aurobindo; among cement names, Dalmia Bharat and JK Cement, Zee Enterprises etc.
“In the smallcap space that includes SJV and Bharat Dynamics, PVR Inox, J&K Bank, PNC Infratech, Marksans Pharma and Gabriel India. These valuations are still not stressed on a growth-adjusted basis, and we see potential for rerating from significant capital inflows into the mid and smallcap space.”

What do you think is the cause of the stellar rally that we have witnessed? Do you think it is just a pullback from the earlier underperformance? Is it here to stay?
We have seen a great rally in the small and midcaps in the last few months in this calendar year. We did some analysis to see how the outperformance of the rally pans out over a longer period. If we look at a 10-year timeframe, the smallcaps and midcaps have outperformed the Nifty by about 600 to 600 bps on the mid-cap index and 300 plus bps annualised for the smallcap index. But this outperformance comes down significantly if you look at the last five-year timeframe.

Unlock Leadership Excellence with a Range of CXO Courses

The Nifty small cap index has actually underperformed Nifty in the last five years and this has happened mainly because in the 2018 to 2022 timeframe, when