Here is why First Global's Shankar Sharma is still bullish on mid-and small-cap stocks

Medium and small sized companies, which saw a meltdown last month, are coming back with a vengeance.

Nearly 335 of the 950 stocks in the small and midcap segment have gone up by 20 percent or more from their 52-week lows. But is there room for them to keep running?

The answer is yes, according to Shankar Sharma, co-founder and chief global strategist at First Global. Sharma thinks Indian smallcap stocks are the best asset class in the world.

The 55-year old Sharma is of the view that small-caps hardly get affected by the bear markets because "bull or bear markets are built on the back of the largecaps".

"A bear market doesn’t really happen in a small segment of the market. Smallcaps are the small part of the market," Sharma told CNBC-TV18.

At a time when most market experts are wary of investing in mid or small caps, Sharma is looking at smallcaps, which he says will continue to do very well.

Sharma, who picked Amazon and Apple in early 2000 and which have turned 100-bagger ever since, believes that smallcaps can have bear markets any time but they are unlikely to move the stocks market in any significant direction.

"They can fall 30-40 percent. You have seen even before this year last year demonetization every time 30 percent cuts, 40 percent cuts in smallcaps happen routinely. You want to call that a bear market or a very rapid correction those are all semantics."

But it's the largecaps that bear the maximum brunt in a selloff as they are driven by the economic fundamentals.

"The problem that has emerged in the last two months has been the larger macro of India, which will hit largecaps obviously the most. Because largecaps are totally linked to the macro of the country. Smallcaps have different dynamics, very small dynamics, local dynamics. So, exclude them from that discussion whether it is a bull market or bear market."