Small-Cap & Mid-Cap Investors Time Has Come!

The GDP growth is slowing down and Sensex is making new highs – confused? Don’t be, as Sensex is forward looking and all current data points available indicate that we are headed northward when it comes to stock prices and Sensex levels. 

The beauty of the current situation is that the government has not even announced its growth-oriented strategy yet. I hear that a 5-member committee on investment and growth has been formed, including the PM himself. It excites me because I know we are going in the right direction under the most able leadership of PM Narendra Modi. Another committee has been formed to tackle the unemployment issue and issues related to skilled labour. The new government has set its priority right and the repercussions will be extremely positive for equity investors going ahead.

I have been saying it for a year or so now that the real interest rates in India are too high and are making Indian businesses uncompetitive. Now that the rates are softening, the Indian equity markets will get re-rated and more investors will be willing to park their monies in one of the fastest growing nations in the world.

I am confident that the government will pull out a fiscal miracle by adopting an expansionary policy without really stretching the fiscal deficit to levels that can put the economic growth at risk. India’s GDP should grow at 7.5 per cent soon, even as the forecast for normal monsoon and extension of PM Kisan scheme will boost the rural incomes and drive the consumption story of India.

In the current issue, we have detailed the Modi 2.0 government’s priorities and where should investors focus on in the coming five years. The cover story can be used by investors to either shuffle and rebalance their existing portfolios or to build a fresh portfolio altogether. Do let us know if you share the same optimism and outlook for the next five years.

In our special story, we have focused on the importance of profit margins while analysing stocks. Most of the time, we ignore studying the profit margin trends, which is not advisable. One should focus on high profit margin businesses which can be identified by first focusing on high profit margin sectors. I would strongly encourage you all to take note of our observations and make appropriate stock selection decisions based on profit margin data.



I get a feeling that those investors who will bet on interest rate sensitive stocks in the broader market space may rake in the moolah in FY20 and FY21. The cement stocks are back in the reckoning and are expected to do well. Overall, the markets should remain healthy and the certainty in the markets will calm the nervous investors. There could rarely be a better time than now to participate in the India growth story, if you have not started yet.

The small-cap and mid-cap investors, who have been sulking for more than 16 months now, need not say – “Apna Bhi Time Ayega” anymore, because I believe the time has arrived already with broader participation visible in the markets, which may translate into outperformance sooner rather than later. Construct a portfolio keeping in mind a five-year horizon at least and accumulate aggressively quality stocks as market gets back its mojo in FY20.

Happy Investing!