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Indian Stocks: Small-Cap Surge Expected by 2027
5 Mar
Summary
- Small- and mid-cap stocks may yield returns in the next three years.
- Attractive valuations emerge following recent Indian equity market decline.
- Information technology stocks are advised against due to earnings concerns.
Aniruddha Sarkar, co-founder of Equinova Investment Management, predicts that Indian small- and mid-cap stocks could generate significant returns within the next three years. He suggests that the recent decline in Indian equities has created opportunities in specific market segments where valuations have become more appealing.
Sarkar noted that the Nifty 50 and Nifty Midcap 150 have fallen 5.7% from their early January highs, while the Nifty Smallcap 250 has seen a 14% decrease from its July 2025 peak. He advises caution on information technology stocks, recommending avoidance unless earnings show a clear upturn, noting they have been the weakest performers since early February.
The investment outlook remains constructive for non-ferrous metals due to anticipated demand-supply dynamics. Furthermore, there's a strong resurgence in private capital expenditure appetite, with a focus on the commercial vehicle and two-wheeler cycles. Sarkar believes the market is discounting current geopolitical and economic uncertainties, and domestic investors are not inclined to sell at this juncture.
