Motilal Oswal Bets Big on Small Caps

Motilal Oswal Private Wealth has increased its overweight allocation to Indian mid- and small-cap stocks by ten percentage points, now representing a 50% investment. This strategic shift is driven by the stronger presence of these segments in high-growth, new-economy sectors and improving valuations.

The firm advises a neutral overall stance on Indian equities. Investments in hybrid strategies and large-cap stocks are recommended at forty percent. The remaining ten percent of the portfolio should be invested in global equities. For hybrid strategies, lump sum deployment is suggested at current levels, while equity-oriented strategies should be staggered due to prevailing uncertainties.

Mid- and small-cap stocks offer a broader representation of India's capital expenditure cycle and high-growth areas like healthcare beyond pharmaceuticals. Recent foreign institutional investor (FII) flows are also shifting away from benchmark-heavy sectors towards manufacturing and industrial themes with greater mid- and small-cap exposure.