'Wide opportunity set makes a case for mid-, small-cap allocation'

The mid- and small-cap space, which has been drawing cautious views from experts over the past two years due to elevated valuations, has received a constructive outlook from a fund house.

 

Mirae Asset Investment Managers (India) on Monday said the growing presence of high-quality, sector-leading companies in the mid- and small-cap segment makes a strong case for meaningful allocation.

 

“While there has been a large inflow of money into mid- and small-cap stocks over the past couple of years, it does not mean that all opportunities are exhausted. Valuations are elevated in pockets, but there remain several sector leaders and scalable businesses that are still reasonably priced, especially compared to large caps where opportunities are more constrained,” said Neelesh Surana, chief investment officer at Mirae Asset Investment Managers (India).

 

He added that market-cap categories should not be painted with the same brush, and that portfolio construction should focus on identifying better-quality companies rather than size alone.

 

On the broader market, the asset manager said 2026 could prove to be a better year for equities as earnings recover. “We remain constructive, as earnings growth is likely to return to a double-digit trajectory after a muted FY26, driven by improving demand, tax cuts and monetary easing,” Mirae Asset said.

 

On the fixed-income side, the focus in 2026 is expected to be on the transmission of rate cuts aggregating 100 basis points undertaken in 2025.

 

“The yield curve remains steep and is expected to flatten during 2026 in segments up to three years, primarily driven by liquidity measures aimed at effective transmission. As such, money market instruments and corporate bonds up to three years remain attractive, with accrual and yield-curve flattening strategies expected to optimise risk-adjusted returns,” said Basant Bafna, senior fund manager and dealer, fixed income, Mirae Asset Investment Managers (India). 

Mirae Asset India plans industry-first GIFT City schemes 

Mirae Asset Investment Managers (India) on Monday said that it has plans to launch multiple differentiated offerings through the GIFT City platform in 2026 including an outbound fund targeted at foreign investors. The scheme, likely the first of its kind, will allow foreign nationals to invest in global markets (excluding India) in a tax-efficient manner, said Vaibhav Shah, Head – Products, Business Strategy & International Business at Mirae Asset Investment Managers (India).