Investors are anxiously waiting for signs of recovery in the mid-cap and small-cap segment, which has severely underperformed despite benchmark indices hitting new highs. This imbalance, experts say, cannot continue for long, and a catch-up rally is likely, especially if the broader market takes a breather soon. A relief rally over the next 30 days could allow investors to book profits, rebalance portfolios, and restore confidence. Additionally, clarity around the upcoming US-India trade deal could act as a major trigger, lifting sentiment and enabling mid-caps, small-caps and large-caps to rise together. It’s not the end of the road, but a period that requires patience, watching key catalysts, and planning entry/exit strategies carefully.
The market is facing a challenging phase where large caps lead the rally, while retail SIP flows are concentrated in mid-caps and small-caps, causing imbalance and falling returns in portfolios. Meanwhile, the IPO frenzy continues despite stretched valuations, with every issue getting subscribed regardless of fundamentals. Experts warn this is not the time to aggressively buy, but to preserve cash, stay cautious, and look only for pockets of comfort. Cherry-picking high-quality stocks has become extremely difficult, and investors may need to wait for clarity from the upcoming US-India trade deal, which could act as a major sentiment trigger. Until then, navigating this market requires patience, discipline, and selective exposure — tough times demand tough decisions.
Power Finance Corporation (PFC), a Navratna PSU, is drawing investor attention as it trades below its book value of ₹385, currently around ₹351, offering an attractive dividend yield of 4.5%. Supported by strong tailwinds in the power sector and robust profitability, PFC has demonstrated impressive profit CAGR of 14% over 10 years and 26% over the last five years. While timing a reversal remains uncertain, experts suggest this may be a compelling opportunity for staggered accumulation, especially with many PSU companies expected to announce interim dividends in December–January, aligning with government budgeting requirements. Analysts highlight that value opportunities are emerging across the PSU pack, focusing on high dividend yield and beaten-down stocks well off their highs - potentially offering favorable risk-reward setups.
Kranthi Bathini, Director of Research at WealthMills Securities, shares a contrarian view on the Indian IT sector amid a weak rupee. While IT stocks remain choppy and volatile, strong business models and long-term prospects make large-cap IT companies attractive for a 2–3 year investment horizon. The current rupee depreciation offers short-term comfort, but the key driver remains US economic growth and AI adoption. Medium- and long-term investors can look at large-cap IT and selective mid-cap names like Persistent and Pope Forge. Short-term knee-jerk reactions may cause volatility, but patient accumulation can reward investors as Indian IT firms scale AI capabilities.
The Indian rupee has hit a record low of 90.13 against the US dollar, raising market concerns despite 8.2% GDP growth, the highest in six quarters. In an exclusive conversation, Aditya Pagaria, Senior Fixed Income Fund Manager at Axis Mutual Fund, analyzes what’s driving the currency’s sharp decline and what the upcoming RBI policy could signal. With inflation nearly at 0%, expectations of a 25-bps rate cut remain divided, making Friday’s policy outcome a 50-50 scenario. Liquidity, currently comfortable at ₹4 lakh crore, may tighten significantly by March. Bagaria also discusses yen carry trade risks, bond investment strategies, and how investors should position ahead. All eyes now turn to the RBI’s commentary and tone.
The rupee plunged to a historic low of 90.29 against the US dollar, triggering concern across forex and equity markets as the RBI held back from stepping in. Persistent dollar demand, weak foreign inflows, and uncertainty over India–US tariff negotiations pushed the currency past the crucial 90 level within minutes of trade. Speaking to Business Today's Aabha Bakaya breaks down the sharp slide with Naveen Mathur of Anand Rathi, who explains why safe-haven dollar buying, trade deficit worries, and global weakness in exports are weighing on the rupee. Meanwhile, CEA Ananth Nageswaran remains unfazed, saying the fall won’t hurt inflation or exports and that the rupee could strengthen again next year.
Silver has hit an all-time high on the MCX, touching ₹1.82 lakh per kg, driven by global supply deficits, safe-haven demand, and a weakening rupee. Gold trades nears it record high, continues to trade strong amid expectations of Fed rate cuts and rising ETF interest worldwide. Speaking to Business Today's Aabha Bakaya, Naveen Mathur, Director – Commodities & Currencies at Anand Rathi Share and Stock Brokers Limited, who breaks down why silver is outperforming gold and how a five-year global supply deficit is fuelling this rally. He also explains why silver may remain neutral to bullish in the coming weeks while gold stays range-bound. Listen in
Dinshaw Irani, CEO of Helios Capital, discusses the "phenomenal returns" of the digital space over the last 15-20 months despite a broader quiet market. Speaking to Business Today, Irani highlights his early bet on 'Eternal' at around 50 rupees, noting it has "done a wonderful job" for the fund. He analyzes platform companies like Paytm and Cartrade, stating their exploration growth is what "excites even the foreigners" and differentiates India from developed markets. Irani predicts consolidation in the quick commerce industry similar to food delivery, warning, "I don't see many players remaining there because the burns are very huge." He emphasizes that with India's 350-400 million internet consumers, the sector is "just scratching the bottom of the barrel" and the potential is "humongous." He concludes that while competition exists, the industry typically evolves into a "winner takes all" or two-player market.
Helios Capital CEO Dinshaw Irani remains unfazed by the rupee hitting 90.12, calling it a catch-up after last year’s relative strength. He believes RBI still has room for a 25 bps rate cut, as low inflation provides cushion. Despite the surprise 8.2% GDP print, markets stayed subdued because investors saw through pre-GST stocking; real focus is on earnings. Q2 delivered strong growth — large-caps +10%, mid-caps +25%, small-caps +37% — with upgrades underway. Irani expects mid-teens earnings growth in Q3 and a strong Q4. His ₹4,800-cr Helios Flexi-Cap (24.66% since launch) and mid-cap fund (31% since Mar 2025, ranked No.1) follow an “innovation investing” philosophy that rejects bad promoters/industries first. Overweight financials (shifted from banks to NBFCs) and consumption/internet platforms. Small-cap fund recently launched at historic valuation lows (PEG ~1.1). “Quality + growth + reasonable value” drives outperformance even in tough markets.
Mid-caps and small-caps have sharply underperformed even as the Nifty trades near record highs with only a handful of stocks driving the rally. Speaking on the opportunity, Helios AMC’s Dinshaw Irani explains why this environment motivated the firm to launch its new Small-Cap Fund. Despite stretched standalone valuations, Irani highlights that when measured by PEG (Price-to-Earnings-to-Growth), small-caps are currently the cheapest segment in the market - with a PEG of 1.1 vs. 1.7 for large and mid-caps. With earnings growth strongly favoring smaller companies and performance cycles historically shifting back toward broader markets, Helios believes this is a compelling entry point. The response to the launch has been phenomenal, and the mid-cap strategy has already topped ICRA rankings.
India posted a strong 8.2% GDP growth, the highest in six quarters, surprising economists and the market. Yet equities remain stagnant, leaving investors puzzled. The expert explains that while GDP appears strong, a part of the surge may be due to inventory stocking effects, which the market seems to have looked through. However, the real story lies in earnings performance: large caps delivered 10% growth, mid-caps 25%, and small caps an impressive 37% on a low base. Despite robust fundamentals, skepticism driven by geopolitical tensions, tariff worries, and cautious retail sentiment is weighing on market momentum. The expert remains optimistic, expecting mid-teens earnings growth in Q3 and stronger numbers in March, supported by easing monetary and fiscal conditions.
The Indian rupee has hit a record low, raising questions about market sentiment and the delayed Indo–US trade deal. Our guest expert explains why this sharp fall may have surprised even the RBI, citing weaker-than-expected trade and production numbers along with uncertainty around the trade agreement timeline. Despite the slide, the expert says market sentiment isn’t deeply negative because inflation remains under control, reducing immediate policy pressure. However, concerns persist about trade impact and the rupee touching new lows daily. With the trade deal unlikely before diplomatic developments involving President Putin’s visit, investors are watching closely for RBI action and stability indicators.
Russian President Vladimir Putin’s India visit has once again brought the spotlight back on defence spending and strategic collaborations — including major deals such as the S-400 missile system. With Europe significantly ramping up defence budgets and India accelerating its own maritime and security infrastructure, sectors like shipping and defence manufacturing are seeing renewed investor interest. In this conversation, Abhishek Basumallick, Co-founder and Fund Manager at Shree Rama Managers, explains why shipping — across vessels, ports, and dredging — is emerging as a strong multi-year opportunity, backed by government focus on maritime growth. He also highlights why defence players like HAL, BEL and shipbuilders remain key beneficiaries of rising global security demand over the next five years.
Despite the Nifty hitting all-time highs, many investors aren’t celebrating, says Ikigai Asset Management’s Pankaj Tibrewal, because portfolios aren’t reflecting index strength. Market breadth is at one of its weakest points in years—while the Nifty is at a record, the median Nifty stock is still 8–9% lower. In the mid and small-cap segment, the median stock is 20% below its 52-week high, even though the index is only 7–8% away from its peak. The BSE 500 tells the same story: the index is down just 4%, but its median return is 18% lower. With Q2 earnings improving and GDP growth strong, Tibrewal expects market breadth to recover, and believes that growth-delivering companies will lead the next leg of the rally.
Foreign institutional investors continue selling Indian equities even as the rupee hits record lows and domestic growth remains strong. According to Pankaj Tibrewal, FIIs have been exiting since FY21-22, when the US Federal Reserve began aggressive rate hikes. Higher global interest rates typically push money away from riskier emerging markets like India. Additionally, India’s tax structure for global investors reduces net returns compared to other regions. At the same time, attractive AI-led opportunities in China, Taiwan and Korea have diverted significant allocations away from India. As a result, India has moved from premium to discount weightage in EM portfolios. However, Tibrewal believes that a visible earnings recovery may trigger renewed foreign inflows and improve market sentiment ahead.
India’s GDP growth has surprised on the upside once again, coming in at over 8% — the highest in six quarters. Yet, markets have reacted with profit booking and caution. Why this disconnect? Abhishek Basumallick, Co-founder and Fund Manager at Shree Rama Managers, explains the role of the inflation deflator and why headline numbers may not fully reflect on-ground sector performance until the base year revision takes place. He argues that instead of relying purely on GDP figures, investors should evaluate company earnings and management commentary. Based on recent quarterly results, sectors such as metals, real estate, chemicals, healthcare, manufacturing, defence and selective banks have delivered strong median EPS growth. Among them, defence stands out as the most promising theme in the near to medium term, supported by rising strategic spending and domestic capabilities.
ASK Hedge Solutions CEO Vaibhav Sanghvi remains cautiously constructive despite Nifty’s struggle at 26,300. He believes the index will eventually break higher, driven by the first earnings upgrades in four quarters and robust corporate commentary pointing to a stronger H2 and ~15% growth in FY27. Key triggers missing: convincing FII inflows. Persistent outflows since 2021 are linked to high US rates, India’s relative valuations, tax structure and the AI-led shift to China/Taiwan/Korea. Consumption (autos showing strong demand), industrials (early private capex signs) and private banks (NIMs bottoming) are his preferred bets for the next 12-24 months. Large-caps offer better risk-reward than mid/small-caps, where growth must still catch up to valuations. Net long exposure has risen from near-zero in Sep 2024. Tailwinds currently outweigh headwinds; only a sharp growth slowdown or global shock can derail the recovery.
With strong macro tailwinds, consistent retail flows into mutual funds, and improving earnings momentum, Nifty could see meaningful upside by mid-2026, says Ikigai’s Pankaj Tibrewal. While giving precise index targets is difficult, he highlights that earnings revival is already visible in Q2 and likely to strengthen through Q3 and Q4. Despite headlines of new highs, India has severely underperformed global markets this year-up only 5-6% YTD, compared to 25–60% gains in South Korea, Greece, Germany, and China. India also underperformed the emerging-market index by 24–25%. Tibrewal believes downside is limited barring global shocks and expects a double-digit earnings cycle to drive broader market participation and renewed confidence into 2026.
Despite Nifty’s record highs post the 8.2% Q2 GDP print, investor happiness is missing because market breadth is among the worst in years. Median Nifty stocks are 8-9% below peaks, mid/small-cap constituents 18-20% off highs. Yet Ikigai CIO Pankaj Tibrewal sees hope: Q2 earnings grew 15% for the top-500, with mid-caps +31% and small-caps +36% (even after adjusting for OMCs). He believes markets are in a 15-month consolidation, not a bear market, as corporate balance sheets are strong and solvency risks absent. His ₹3,500-cr mid/small-cap portfolio is overweight autos & ancillaries, chemicals, banking/NBFCs, metals and select IT/digital names. “Growth will be rewarded; stock-picking is the only way forward,” he says.
Responding to concerns about a narrow rally in the Nifty and weakness in the broader market, experts call the current phase a 15–16 month consolidation, not a crash scenario. Unlike 2018–19, when names like DHFL, IL&FS, and Vakrangee created systemic solvency fear—today the balance sheets of corporate India, especially mid & small caps, are significantly stronger, reducing risk of deep declines. The pressure is coming from valuation cooling after a strong multi-year rally and heavy supply of IPO and primary equity paper, diverting liquidity away from secondary markets. While mid & small caps are correcting, the advice is clear: don’t sell in panic, as many future growth sectors are better represented in mid and small caps than in large caps.
Is ₹90 per dollar the new normal for the rupee, or just a short-term correction? According to market expert Pankaj Tibrewal, the recent sharp dip in the rupee is largely due to tariff-related export pressure and a jump in gold imports, which weakened the current account position. Several sectors including textiles, gems & jewellery, pharma and chemicals took a major hit due to tariff barriers. However, Tibrewal believes the weakness is temporary, supported by strong long-term fundamentals-inflation differentials between India and the US have narrowed significantly, and the interest-rate gap is at just 2%, one of the lowest in years. Once tariff issues are resolved, export momentum could return, helping the rupee stabilize and potentially strengthen again.
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