For months, a puzzling divergence has played out on Indian exchanges: even as marquee Nifty 50 constituents have struggled, the mid and smallcap universe has quietly — and then loudly — raced ahead. Rajesh Kothari, Chief Investment Officer at AlfAccurate Advisors, which manages over ₹3,500 crore in PMS, has a clear explanation, and it comes down to one word: earnings.
"The earnings delivery is what is basically the driving factor, be it a megacap, be it largecap, be it midcap or smallcap," Kothari told ET Now. The difference, he argues, is that the headwinds buffeting India's biggest companies — commodity volatility, muted IT services demand, oil marketing swings — simply do not apply to a large swath of the mid and smallcap universe. "Moment you look at 50-plus companies up to 1000 companies, there are so many opportunities."
These companies are no longer the fragile bets they once were
Perhaps Kothari's most striking argument is structural. The Indian midcap universe, he says, has undergone a fundamental transformation over the past five years, one that the market still underappreciates. Debt-heavy, cyclically vulnerable companies have been replaced by profitable, cash-generative businesses with fortress balance sheets.
