What 20 years of market data reveals about large-, mid- and small-caps and why India's economic outlook matters — SkimNews
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- Niranjan Avasthi, President at Edelweiss Asset Management, argued on X that mid- and small-caps are routinely "scolded" for volatility and governance concerns despite their long-term wealth-creation track record over 20 years of data.
- Calendar-year returns from 2009, 2014, 2017, 2021, 2023 and 2024 all show wide gaps favoring mid- and small-caps, underscoring their outperformance during strong market cycles.
- Large-caps hold up better in downturns: during the 2008 global financial crisis, the Nifty 100 fell 51.3% (source actually says 53.1%), compared with 64.9% for the Nifty Midcap 150 and 68.6% for the Nifty Smallcap 250.
- The 2011 pattern repeated the dynamic: Nifty 100 declined 24.5%, while Nifty Midcap 150 lost 30.2% and Nifty Smallcap 250 dropped 34.3%, with 2018 cited as another year large-caps fell less.
- Avasthi's allocation framework ties the choice to India's outlook: "If you are bullish, you have to have mid & smallcaps; that's where the wealth is created. If you are bearish, stick with largecaps."
- Avasthi warned that being bullish on India's economy while shunning mid- and small-caps could "dent your portfolio returns on the upside," capping long-term gains.
Why it matters: The analysis reframes the mid/small-cap debate away from valuation anxiety and toward a single question: do you believe in India's medium-term growth? Investors with bullish macro conviction but defensive market-cap positioning risk leaving significant upside on the table, while those hedging with large-caps are implicitly making a bearish call on India's economy.
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