Stories
Emkay Investment Managers Bets Big on Mid, Smallcaps; Sees Auto, Private Banks as Key Opportunities
- •Emkay Investment Managers' CIO Manish Sonthalia predicts mid and smallcap funds will dominate the Indian equity market in 4-5 years, outperforming large-caps due to higher growth potential.
- •High-growth sectors, often outside large-cap space, offer significant runway for mid and smallcap segments over the next 5-7 years, with themes like energy transition and high-tech manufacturing.
- •Sonthalia advises investors to use systematic investment plans (SIPs) with a 3-5 year horizon to capitalize on early-stage growth in emerging sectors.
- •Emkay remains constructive on the automobile sector, favoring both OEMs (Eicher Motors, Maruti Suzuki) and auto component makers (Lumax Auto Technologies, Sansera Engineering), citing attractive valuations after recent corrections.
- •Large private sector banks are also highlighted for value, supported by lower funding costs, healthy credit conditions, and potential retail lending recovery, despite management transition factors.
Key Questions Answered
Mid and smallcap funds are projected to become the largest segment over the next four to five years because smaller companies possess greater exposure to high-growth sectors and outperform largecap numbers. High-growth themes like energy transition, semiconductors, and AI data centers are predominantly concentrated outside the large-cap space, giving smaller companies a meaningful growth runway.
Investors should allocate capital to the mid and smallcap segments through systematic investment plans maintaining a three to five-year horizon to capture early-stage growth in emerging sectors.
Emkay remains constructive on the automobile sector because festive demand is encouraging based on channel checks, and recent time corrections in some auto stocks have made the sector more attractive from a two- to three-year perspective. The preference extends to both original equipment manufacturers and component makers.
