Motilal Oswal bets on the smallcap space; says next upswing on the anvil

The Nifty Midcap100 index in 2019 declined around 4 percent while Nifty Smallcap100 plunged 10 percent. Despite a bigger correction than mid-caps, Motilal Oswal's asset management division believes that buying small-caps at the right time has resulted in significant outperformance over large-caps.

From its peak, while the Nifty 50 is down around 7 percent, Nifty Smallcap 100 is down 43 percent. For two consecutive financial years, small-caps have underperformed large-caps but that might not be the case anymore.

Motilal Oswal, in its report has said, “We certainly believe now is one such opportunity. Clients who have invested in small cap portfolios in calendar years 2017 and 2018 have seen large drawdowns in line with the index. Higher drawdowns have tested many investors but as history suggests, increased allocations at these junctures and staying put far outweigh the benefits over breaking down at this stage.”