In a global context marked by economic uncertainties and market volatility, the current trajectory of mid-cap and small-cap investments have been displaying worrisome trends, says Rahul Chadha, Chief Investment Officer at Mirae Asset Global Investments.

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Sharing his thoughts on the current move of small and mid cap segments in the stock market with CNBC-TV18, Chadha said; “This move in mid, small caps up nearly 35-40 percent since last six months may be a bit worrisome. ”

Chadha's other key observation focused on the practical actions investors can take to navigate the turbulent waters. He suggested that a strategic shift from midcap and small-cap investments to large-cap holdings may be a prudent move. This shift has been a trend for the past 2-3 months, indicating a shift in risk appetite towards more stable options, he aded.

“That is something we have been doing since last two-three months. Look at our midcap portfolios, some of these midcap names, whether it is hospitals, real estate or other sectors, we have owned them for 5-7 years but valuations look fairly full here. So what we are doing is top-slicing probably 10-15 percent and moving that to largecaps. Largecaps which offer value could be financial services, some select consumer stocks and even IT stocks for that matter,” he said.

Looking ahead, Chadha predicted a potential pullback in global equities over the next six months. Investors should be prepared for market fluctuations and make informed decisions to safeguard their portfolios, Chadha said.

Discussing the macroeconomic landscape, Chadha touched upon the interest rate scenario in India. He suggested that it is unlikely for India to witness rate cuts before the United States.

Lastly, Chadha emphasised the growing importance of inflation in the investment narrative over the next few months. Rising inflation rates can impact investment strategies, as they can erode the real value of assets. Investors should keep a close eye on inflation indicators and adapt their portfolios accordingly.

For more details, watch the accompanying video

(Edited by : C H Unnikrishnan)

First Published:Sept 12, 2023 3:20 PM IST