The report highlighted: "Nifty 50 gained 1.91% in October, while the rest of the market cap spectrum declined."
How much did investors lose?
The divergence becomes clearer when translated into investment values.
A hypothetical ₹1 lakh invested in an instrument perfectly tracking the Nifty 50 would have grown to ₹1,01,910 during October. In comparison, ₹1 lakh tracking the Nifty Microcap 250 would have fallen to ₹91,050, representing a loss of ₹8,950.
Similarly, ₹1 lakh tracking the Nifty Smallcap 250 would have declined to ₹94,190, while an equivalent midcap investment would have fallen to ₹96,250.
These calculations reflect index movements, excluding fund expenses, tracking differences and taxes. Actual mutual fund returns may differ.
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Why did large caps outperform?
October's performance suggests investors favoured relatively established companies over smaller businesses amid broader market weakness.
Sectoral trends also reflected sharp divergence. Information technology surged 17.69%, while Healthcare gained 1.93% and Banking advanced marginally by 0.10%.
Meanwhile, Metals declined 7.65%, Defence fell 6.17%, and Consumer Durables dropped 5.74%.
Motilal Oswal's report noted that IT contributed 0.99 percentage points to Nifty 500 returns, while Telecommunications added 0.32 points. However, Industrials and Commodities each dragged returns by 0.54 percentage points.
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Should investors switch SIPs to large-cap funds?
For investors running SIPs in small- and mid-cap mutual funds, October's correction highlights the importance of risk management rather than an immediate need to exit.
Large-cap funds generally offer exposure to established companies with relatively greater liquidity, while smaller companies can experience sharper fluctuations during market corrections.
However, shifting SIPs solely because large caps outperformed in one month could mean reacting to short-term volatility rather than following long-term financial goals.
Investors with shorter investment horizons or lower risk tolerance may consider reviewing their allocation towards large-cap and diversified equity funds.
Those investing for longer-term goals can evaluate whether their existing small- and mid-cap exposure remains consistent with their risk appetite.
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