Small-caps expected to outperform large-caps, says Vora

Mihir Vora, chief investment officer of TRUST Mutual Fund, believes that mid-caps and small-caps will provide better investment returns compared to large-cap stocks. He predicts that large-cap stocks will deliver around 11% returns, while small-caps could grow by 16-17% in the coming years. Currently, Vora notes a shift in investor interest toward the financial sector, particularly larger banks and non-banking financial companies (NBFCs), after a period of underperformance. In contrast, the information technology (IT) sector is facing challenges due to low growth expectations and uncertainty in the U.S. economy. Vora has adjusted his investment strategy in response to recent market downturns. He sees the correction as a chance to reset expectations for valuations and sees potential for future growth, especially in sectors like banking and industrials. He has reduced investments in IT and consumer sectors but remains optimistic about capital expenditure orders from the government. He observes a strong growth outlook for India's economy, projecting it will grow faster than China. Foreign investors have been cautious lately, but he believes they will return as the market stabilizes. Vora emphasizes that India remains an attractive destination for long-term investments. He suggests that sectors with rising income levels and technological disruption will offer significant opportunities. In the consumption space, premium and discretionary products are likely to see more growth than everyday goods. For investors, Vora recommends a balanced approach to asset allocation, considering risk tolerance and investment horizons. Younger investors might focus more on equities, while those nearing retirement should consider fixed-income assets. Small-cap funds might appeal to those seeking higher growth.