Should you be worried about valuation of smallcaps?
Players with strong balance sheets and strong brands in the midcap and smallcap space are gaining market share from unorganised players, says Aishvarya Dadheech, Ambit Asset Management in this interview. Edited excerpts:
Let us start by understanding your thoughts on smallcaps. Do you find froth in valuations?
Midcaps and smallcaps outperformed largecaps in calendar year 2020. We are seeing massive outperformance even this year as well. There is enough leg room for the momentum to continue. All three participants — DII, FII and even retail — have increased their exposure in this particular segment.
If you look at the last five quarters, the ownership of DIIs in midcaps and smallcaps has moved from half per cent to 2.8 per cent; whereas FIIs have increased it from 2.7 per cent to almost 3.3 per cent. A large part of increment has happened on the smallcap side. Retail investors, who are leading this rally, have increased it from 3.1…