Valuations within the small-cap phase should not uniform, with some shares showing costly whereas others proceed to supply engaging entry factors, says Varun Goel, Senior Fund Supervisor at Mirae Asset Funding Managers (India). In an interview with Livemint, Goel shares his outlook on the Indian inventory market towards the backdrop of world geopolitical uncertainty and explains why he stays optimistic a few progress rebound in FY26.
He additionally affords insights into the sustained investor curiosity in small-cap funds, sectoral preferences, and why Mirae prefers staying totally invested slightly than sitting on money throughout unstable instances. Edited excerpts:
How do you learn the general markets within the backdrop of an unsure geopolitical state of affairs?
FY26 needs to be the yr for progress rebound for India. We anticipate that vital financial easing, tax cuts and good agricultural manufacturing and powerful restoration in central authorities capex spending ought to result in restoration in GDP progress and company earnings. Geopolitical tensions — whether or not stemming from commerce disruptions, regional conflicts, or vitality market instability — are undoubtedly contributing to near-term volatility.
Nevertheless, after we transfer previous the headlines, the Indian progress story continues to look promising. Credit score progress and company earnings ought to get better, and infrastructure-led capex is gathering momentum. In our view, it is a time to remain engaged and construct portfolios with structural resilience.
Do you consider smallcap funds can emerge as clear winners on this unstable market atmosphere?
Small-caps are inherently extra unstable, and sharp corrections are a part of the cycle. Historic developments present that when macro and sentiment-related headwinds ease, this phase tends to rebound strongly. We’re specializing in smallcap companies which have sturdy earnings visibility, prudent steadiness sheets, and scalable enterprise fashions. Over a 3–5 yr horizon, these can emerge as significant compounders.
Smallcap funds have seen almost ₹21,000 crore in inflows, but the phase hasn’t carried out effectively in 2025. How do you rationalise this investor behaviour?
These inflows in smallcap mutual funds recommend a maturing investor base that’s extra aligned with long-term investing. A big a part of these flows is pushed by systematic funding plans (SIPs), the place traders proceed to take part regardless of short-term volatility. It is a wholesome growth. Reasonably than reacting to market noise, traders are treating corrections as alternatives. Usually, such disciplined participation can lay the muse for stronger long-term outcomes — particularly within the smallcap area, the place recoveries will be sharp.
How do you view smallcap valuations? Is the premium at present seen justified?
Valuations within the smallcap phase should not uniform. Whereas some areas are undoubtedly buying and selling at stretched ranges, others nonetheless supply engaging entry factors. One ought to keep away from getting carried away and chasing overheated tales. We take a bottom-up view — valuation is justified solely when it’s backed by robust fundamentals resembling earnings progress, capital effectivity, and a transparent path to scalability. Selectivity is essential on this section.
What sectors are you bullish on and why? Additionally, which three sectors are you at present avoiding?
We stay constructive on the lending area. The numerous financial easing carried out this yr ought to result in wholesome progress for small banks, SFBs and NBFCs. The healthcare phase is geared in direction of wholesome medium time period compounding with hospitals and diagnostics area seeing a powerful shift from unorganized to organized.
Additionally, we see secular progress alternatives in CRAMS (contract analysis and manufacturing) area. The portfolio is extra geared in direction of capturing home financial restoration tales in BFSI, Auto, Capital items and manufacturing and cautious on export segments.
Given the present uncertainty, does it make sense to take a seat on money?
At Mirae Asset, we don’t consider in holding massive quantities of money as a strategic stance. We favor to stay totally invested in high-conviction concepts. Sitting on the facet strains dangers lacking out on high quality alternatives that usually emerge during times of dislocation.
Does the scale of a fund influence its efficiency? Are smaller funds extra environment friendly within the smallcap area?
Within the smallcap universe, fund dimension can affect operational flexibility. Smaller funds are sometimes extra agile in constructing significant positions in rising corporations the place liquidity is tight. That stated, effectivity will not be purely about dimension — it’s concerning the robustness of the funding course of. What issues is the standard of analysis, portfolio building, and danger administration. Finally, it’s the consistency and self-discipline in execution that drive outcomes — not simply fund dimension.
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Disclaimer: The views and suggestions made above are these of particular person analysts or broking corporations, and never of Mint. We advise traders to verify with licensed specialists earlier than making any funding choices.
