- Mid-caps could lead the next market rally with 60% portfolio outside frontline stocks
- Focus on companies with market cap between Rs 2,000-5,000 crore and mid-cap domestic flows
- Defence sector seen as structural with potential order winners in ancillary manufacturing
Mid-caps could lead the next leg of the market rally, with domestic flows increasingly finding their way into stocks outside the frontline indices, according to Gurmeet Chadha, Complete Circle.
Chadha said around 60% of his portfolio should be invested outside the frontline indices, with a focus on companies in the Rs 2,000-5,000 crore market-cap range.
“Majority of domestic flows are invested in mid-caps,” Chadha said in an interaction with NDTV Profit.
He said he continues to see opportunities across precision engineering and component manufacturing, while also adding select new-age companies to the portfolio.
Defence story turning structural
Chadha said the defence theme is becoming structural for India, but investors need to remain cognisant of the size of defence orders while evaluating companies in the sector.
He expects several order winners to emerge from the ancillary space as defence manufacturing expands.
“May see a lot of order winners from ancillaries,” he said.
Chadha also expects growth in India's export orderbook to be stronger than anticipated, creating opportunities for companies with exposure to global markets.
Bullish on cables, wires and power electronics
Chadha remains bullish on cables and wires despite UltraTech Cement's entry into the segment. He also has a positive view on power electronics companies, including CG Power.
Beyond these segments, Chadha sees opportunities in chemicals and artificial intelligence infrastructure.
He is also seeing more opportunities in battery component manufacturing, another area where he expects companies outside the large-cap universe to benefit.
10-15% offshore exposure, 5% in gold
Chadha said the portfolio is also targeting an offshore allocation of 10-15%, while around 5% could be allocated to gold. Within the domestic market, the focus remains on companies with a market capitalisation of Rs 2,000-5,000 crore.
Precision engineering and component manufacturing remain key areas of interest, while certain new-age companies are also being added to the portfolio. Space technology is another area throwing up several new opportunities, Chadha said.
Positive on recent IPOs
Chadha said the listing of Milky Mist was positive and the focus now is on the stock's momentum. He is also optimistic about the Glass Wall Systems IPO.
At the broader market level, Chadha said he is not seeing significant foreign or domestic flows into large-cap stocks, reinforcing his preference for opportunities beyond the frontline indices.
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