Large caps are not only relatively attractively valued compared to mid and small caps, but also have exciting growth prospects ahead as it is the leaders that have the highest capability to invest substantially to make India’s growth dreams a reality.
Large caps offer a tactical rotational opportunity as money seeks to move into relatively attractive market segments as well as a structural opportunity to harness India’s growth story. Investors who have large proportions of small and mid cap funds in their portfolios may well be missing out on India’s biggest growth stories.
Nippon India Large Cap Fund continues its long term outperformance journey, delivering strong alpha over medium as well as long term horizons. Sailesh believes alpha opportunities will continue to abound on two counts: (1) active bet sizes that managers take within the large caps space and (2) the changing face of the large caps index constituents as midcaps and newly listed companies come into the index, initially at small weights from an index perspective but which offer sizeable opportunities for active managers.
Some of the favourite themes of CY23 including capital goods are showing some signs of running ahead on valuations while some of the old favourites that have been ignored over the last 3 years are now looking attractive.
The notion that large companies grow slowly is incorrect –look at the US as a case in point, where large and mega caps have clearly led the way. Large caps in India account for65% of the market. Investors need to review their portfolios to ensure they are adequately invested in growth focused well managed market leaders – many of whom can become global leaders over time in their respective businesses.