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    With a long term perspective: 5 smallcap stocks from different sectors with some checks and balances

    Synopsis

    On a day when Nifty is trading with a cut of over 1% and Nifty Bank is over 3% down. Several investors would be looking at their portfolios. Probably there would be two very different thoughts that might be coming to the minds. It could be either that smallcaps are a good set of stocks because, despite Nifty's fall, they have not fallen as much so why should one be bothered? Or there is the possibility that some would be thinking that this fall in Nifty can be now moved to smallcaps in some days so sell smallcaps. Now an investor who has taken exposure to smallcaps should first de-link both these correlations with what is happening to the Nifty. He or she should look at individual stocks and then decide to either hold or sell the individual smallcaps as in this space, while collective winds do impact these stocks but at the end of the day long-term performance is determined by the fundamentals of each company.

    The recent performance of small caps has brought them in the category of stocks where the desire to own them is “highest”. But the fact which gets ignored in such conditions is that “risks” are also at the highest. The reason, valuation across the board are expensive and corrections in small caps are probably the most brutal ones. Just jog your memory back to October 2021. For all those who still want to take exposure to them, in such times, it
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    The Economic Times