India's Mid And Large-Cap Stocks To Scale Bigger As Economy Grows, Says Deepak Shenoy

India’s mid and large-cap stocks are set to grow significantly as the economy continues its upward trajectory, according to Deepak Shenoy, founder and chief executive officer of Capitalmind.

“The secondary market offers enormous opportunities, particularly in the mid-cap and some large-cap segments,” Shenoy stated. He noted that India’s current large-cap stocks, in terms of market capitalisation, are equivalent to mid-cap levels in the US market. “As we scale as an economy, a lot of companies will reach those levels."

Shenoy expressed optimism about specific sectors, saying, “I’m happy to look at manufacturing as a theme, particularly defense-based manufacturing. Financial infrastructure will also witness significant changes.” He highlighted the potential of companies operating in the import substitution space, anticipating that India might achieve a current account surplus in the coming decade.

While the market has shown volatility, Shenoy emphasised that the recent rally in mid-caps and the emergence of stronger government capital expenditure in the past four months signal opportunities for growth. “Some companies that didn’t perform well in the last two quarters could benefit from this momentum,” he said.

Shenoy said that the trading activity typically slows in late December due to reduced news flow. However, he expects volumes to pick up significantly in January. “We’ll see more action as corporate results come in, along with the U.S. presidential transition and India’s budget in February,” he explained.

The Capitalmind CEO also cautioned about potential corrections in the market. “The market is volatile on both the upside and downside. While we may see some corrections, I don’t view the market as majority negative from a trigger perspective," he said.