Key Points
We have seen a nearly range-bound market in terms of larger indices for the last two years now plus or minus 5% kind of movement on a compounding basis last two years, which itself reflects the kind of current conditions we are going through, for example, the global challenges whether it is related to the geopolitical side or from interest rates at the levels, where higher for longer kind of a thought process there and also issues, like you said, in India and locally the election will led volatility..
These were the set of companies which people loved to own four years back and these were the spaces where people said that we will never sell them forever or buy forever type of spaces and those large businesses today are forgotten blue chips, virtually nobody talks about it and people find it the most painful or the most unloved space..
The other side where we underweight still is IT services which is a material underweight for us given that the near-term growth rates globally are weak and the outlook remains weak even after corrections, that space might still middle around for a long period of time but the clear significant overweights are banks and financials, pharmaceutical spaces then engineering and manufacturing select businesses, where there is relative sensible value and the utilities as we mentioned...
If you look at it the larger companies in India are quoting cheaper than the smallest of small companies in India today which is a reflection of the fact that there is some dislocation of markets and opportunity emerging in the large cap spaces today..
To your question whether one should book profits in mid and smallcaps and move to largecaps. clearly the relative risk reward or attractiveness of largecap space is way better than other spaces today..
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