'Small-cap valuations are expensive but still in the comfort zone'

How is your team viewing the current market valuations and preparing for possible corrections? Large-cap valuations are in the comfort zone, with Nifty50 trading at a P/E of around 19x forward earnings, at par with the 15-year average. Mid-cap valuations, however, are out of sync with historical averages and large-cap valuations. They currently trade at an 80 per cent premium to large caps, compared to the historical 20 per cent premium. This seems unjustified, given the reduced growth delta. Notably, only 30 of 150 mid-cap stocks account for most of the rally. Small-cap valuations are expensive but still in the comfort zone. Historically, they traded at par or a slight discount to large caps, but now they trade at a 10

This article was originally published on October 28, 2024.