Record highs for midcaps and smallcaps, yet foreign investments favour struggling largecaps, says HSBC

Amid the evolving landscape, midcaps and smallcaps have garnered significant attention by reaching unprecedented record highs. This surge in value has attracted considerable interest from domestic investors, contributing to the overall buoyancy in the market. These smaller companies, often representing sectors with growth potential, have been displaying remarkable resilience and growth, bolstered by a combination of robust financial performance and increased investor confidence.

However, there is an intriguing twist when it comes to foreign investments. Despite the impressive performance of midcaps and smallcaps, foreign investment flows seem to be favouring the largecap segment, which has been grappling with its own set of challenges. Largecap stocks, usually comprising top-tier companies in terms of market capitalisation, have encountered obstacles that have impacted their growth trajectory.

In an interview with CNBC-TV18, Herald Van Der Linde, Head of Asia Equity Strategy at HSBC highlighted that the inflow of foreign funds into largecaps, even as midcaps and smallcaps soar to new heights, is a noteworthy trend that requires careful consideration.