Large vs mid vs small caps: Where to look for alpha in Samvat 2082?

Key triggers for the upcoming Samvat include a broad-based consumption from GST 2.0, urban demand recovery, festive tailwinds, and an earnings acceleration

With small-cap stocks facing valuation pressures and liquidity constraints, analysts see large-cap and mid-cap stocks as the most attractive segment going into Samvat 2082. Stable earnings, better liquidity, and reasonable valuations make them a preferred choice for investors seeking steady returns, they said.

 

According to Anirudh Garg, partner and fund manager at INVasset PMS, large-caps could deliver 10-12 per cent returns in the new Samvat year, aided by policy continuity and rate cuts, while mid-caps may outperform as liquidity improves and capex-led earnings pick up.

Smallcaps feel the heat

So far during the current Samvat year (2081), the benchmark Nifty50 index has risen by around 6.5 per cent, while the Nifty MidCap 100 and Nifty SmallCap 100 indices have delivered 5.5 per cent and -2.5 per cent, respectively. These are the lowest returns for the Indian stock markets in a Samvat year since Samvat 2078, as the markets were hit by a selloff by Foreign Portfolio investors (FPIs) amid global uncertainties.

   

Data from National Securities Depository Ltd. shows that FPIs have sold about ₹1.5 trillion so far in this Samvat year, concerned about various geopolitical tensions, high valuation, modest India Inc earnings, and the impact of US President Donald Trump's tariffs.

 

For small-caps stocks, this meant overheated valuations meeting liquidity withdrawal, as per analysts.

 

"After a 70-80 per cent surge between mid-2023 and early 2025, valuations in the small-cap universe became unsustainably high. The frothy landscape, coupled with profit-booking in Indian equities amid rising US bond yields, record rupee weakness, and margin pressures in export-heavy sectors weighed on the pack," Garg said.

 

Sneha Poddar, VP - Research (Wealth Management) at Motilal Oswal Financial Services Ltd, added that the poor show by small-caps came in the backdrop of stretched valuations, after a two-year surge, combined with sluggish earnings momentum.

 

"On a relative basis too, earnings growth, margin strength, and sector tailwinds were concentrated in larger firms, denting sentiment in small-cap stocks," she said.

Outlook: Can large-cap outperformance continue?

As global headwinds remain in place, analysts see margin safety in the large-cap universe, given their stable earnings visibility, liquidity comfort, and reasonable valuations.

 

"We prefer large and mid-caps over small-caps in Samvat 2082 amid earnings visibility and valuation comfirt. Small-caps are expected to recover gradually from mid-2026 as market sentiment stabilises. Overall, Samvat 2082 appears to be a year of consolidation, giving way to selective optimism across large and mid-tier names," Anirudh Garg of INVasset PMS said.

 

Poddar echoed a similar view and added that mid-caps should continue to deliver stronger earnings momentum, particularly in domestic cyclical themes, while small-caps are likely to stay range-bound in the near term.

 

"As earnings visibility improves and consumption demand revives, this positions the Nifty for a move toward 28,000-28,500 by next Diwali, implying a moderate 9-11 per cent upside," Poddar said.

 

From an investment viewpoint, investors should focus on companies with strong balance sheets, durable cash flows, and consistent earnings delivery, analysts noted. With liquidity and policy tailwinds supporting the broader market, volatility can be used to accumulate quality names aligned with these long-term structural growth themes, they said.

 

Key triggers for the upcoming Samvat include a broad-based consumption boost aided by GST 2.0, urban demand recovery, festive tailwinds, and an earnings acceleration.