Market veteran Shankar Sharma believes that investors can make significant returns on small-cap stocks while large-cap stocks are likely to disappoint in the near term.

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“What you are seeing today in the wider market is more like a capitulation of some kind. I continue to believe that largecaps will disappoint. Largecaps have hardly any upside or at least not a sustained upside. Small caps have plenty of upsides if you choose well. So that is the area where you are going to make significant money,” he said.

In the past six months, the BSE Small cap index has fallen over 13 percent while Sensex is down just over 6 percent.

Sharma believes that the benchmark Nifty50 can fall approximately another 10 percent from the current levels.

"I think NASDAQ could easily be down by 50 percent over the next few months if not a year and in that context, Nifty can fall in my view by a maximum of 10 percent,” he said.

The changing geopolitical situation due to the Russia-Ukraine war and the rate tightening by central banks across the world have resulted in the benchmark Nifty50 falling over 8 percent in the past three months. According to the market veteran, the central banks are way behind the curve and he does not expect them to turn dovish anytime soon.

“As of now, I am bracing myself for a counter-trend rally. I don’t think the core trend itself has reversed or will reverse anytime soon. India has been a laggard market and which is one of the reasons why we are outperforming the world. Therefore in a bear market, the laggards will fall less which is the reason why India is outperforming in this fall," he explained.

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(Edited by : Abhishek Jha)