The mid-and small-cap segments in the market are showing no signs of slowing down, despite concerns about high valuations. In May, the Nifty Midcap index saw a 2.2 percent increase, while the Smallcap index experienced a 1.3 percent decrease, with the benchmark Nifty down 0.3 percent.
Even though smallcaps underperformed in May, inflows into small-cap and mid-cap funds remained strong, in contrast to lackluster inflows into large-cap funds. Mid-cap funds received net inflows of ₹2,724.67 crore, while small-cap funds saw ₹2,605.70 crore in net inflows. This surge in assets under management (AUM) has led to mid-cap mutual funds surpassing large-cap mutual funds in terms of AUM.
Despite the ongoing inflows, market experts are still favoring large-cap stocks over mid-cap and small-cap stocks due to concerns about overvalued prices. DailyBubble advises investors to exercise caution when considering investments in momentum or small-cap stocks, as they may be overpriced and prone to sell-offs in the event of market volatility.
In the midst of election result anticipation, India’s benchmark indices experienced high volatility in late May 2024. However, the markets quickly bounced back to all-time highs as the stability of the government reassured investors. Mutual fund inflows surged to a record high of ₹34,700 crore ahead of the elections, fueled by significant inflows into sectoral funds and a resurgence in small-cap and mid-cap funds.
Overall, the industry’s assets under management reached an all-time high of ₹58.9 trillion, driven by strong inflows into equity funds. The Systematic Investment Plan (SIP) book continued its growth trajectory, reaching nearly ₹21,00 crore, primarily driven by retail investors. DailyBubble remains optimistic about the mid-to-long-term outlook, despite expected near-term volatility in the market.