Keeping It Largely Stable In Stress
Outlook Money|December 2023
Large-caps provide stability, liquidity, especially in times of stress when mid-and small-caps may find it difficult to deliver. This is what makes them a safe bet for most investors
NILANJAN DEY
Keeping It Largely Stable In Stress

As small- and mid-caps keep gaining momentum, resulting in the feeling that valuations are quickly getting stretched, a section of investors is keen on accumulating large-caps. Their rationale: balance the scales once again with stocks that are now being considered too tardy to add any meaningful value to portfolios.

In the days to come, large-caps are expected to bolster those who have almost entirely focused on the mid-and small-cap segments.

The proponents of the logic refer to recent advances recorded by smaller, medium-sized counters, irrespective of sectors. Their prices have gained handsomely, triggering a round of profit booking. This has generally eluded the larger stocks, many of which have appeared slow-paced in comparison over the same timeline. Further, a section of the market has stayed away from large-caps and, at best, remained neutral on a range of such stocks during this period.

The situation, it is felt, has already resulted in dis-balance, thanks to significant over-emphasis on small-and mid-caps. While it is too early to predict whether large-caps will really get a better treatment, there are several compulsions that are working in their favour.

Perceptions Of Necessity

But why should our portfolios generously accommodate large-caps at all? Can we not derive value from stocks in other market-cap classifications? Though such posers are not so easy to address, I will try to summarise the reasons. First, large-caps help in ironing out a few sharp creases. In other words, the average investor’s portfolio needs the kind of stability that large-caps often provide.

Second, large-caps do not suffer from issues related to liquidity, and third, such stocks actually drive returns during periods of stress. When mid- and small-caps do not deliver, it is up to their large counterparts to push performance.

This story is from the December 2023 edition of Outlook Money.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the December 2023 edition of Outlook Money.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM OUTLOOK MONEYView All
Stay Ahead Of AI-Powered Cyber Fraud
Outlook Money

Stay Ahead Of AI-Powered Cyber Fraud

AI has become an integral part of our lives, right from customer service at banks to insurance claims. But it has now become a powerful arsenal for the fraudsters too who are increasingly using AI to scam individuals and corporations alike to commit fraud. The key is to stay vigilant

time-read
7 mins  |
December 2024
Travelling To Europe? Pack In The Essential Covers
Outlook Money

Travelling To Europe? Pack In The Essential Covers

Smart travellers must know that insurance is a must-have. From essential health coverage to theft protection and trip interruptions, know what you need for a worry-free Europe trip

time-read
6 mins  |
December 2024
How To Spend Wisely This Year-End
Outlook Money

How To Spend Wisely This Year-End

We all spend during the year-end. But the trick is not to overspend or borrow, either from friends, or your own investment, to fund your indulgence. Maintaining balance is the key

time-read
5 mins  |
December 2024
Travel Now Pay Later (TNPL)
Outlook Money

Travel Now Pay Later (TNPL)

Travel now, pay later (TNPL) is a close cousin of the more popular buy now, pay later (BNPL) schemes.

time-read
2 mins  |
December 2024
12 Books Devina Mehra Loved Reading In 2024
Outlook Money

12 Books Devina Mehra Loved Reading In 2024

Listing books of her choice, among the ones she reads during the year, is ace investor Devina Mehra's favourite year-end activity. She says it's a daunting task to pick around 12 books from a list of 50.

time-read
6 mins  |
December 2024
Here's How To Avail Of Ayushman Bharat Yojana
Outlook Money

Here's How To Avail Of Ayushman Bharat Yojana

Launched in 2018, the Ayushman Bharat Yojana aimed to provide health coverage to targeted benefi ciaries from the Socio-Economic Caste Census (SECC) 2011, based on deprivation and occupational criteria.

time-read
2 mins  |
December 2024
'Focus On The Business, Assess If You Want To Be A Partner For 10-20 Years'
Outlook Money

'Focus On The Business, Assess If You Want To Be A Partner For 10-20 Years'

Professor Sanjay Bakshi, a value investor, behavioural economist and adjunct professor at Flame University, Pune, gives his unique perspective on how to choose a stock, in an interview with Nidhi Sinha, editor, Outlook Money, as part of the Wealth Wizards series. He also shares his learnings from role models Warren Buffett, Charlie Munger, Benjamin Graham and others, and how being a chartered accountant, economist, investor and teacher make him into what he is today. Edited excerpts from the interview

time-read
10 mins  |
December 2024
The New Trump Card For IT, Pharma
Outlook Money

The New Trump Card For IT, Pharma

Donald Trump has been re-elected as the 47th President of the US after a gap of four years. Here's how it will affect the Indian markets and how it will benefit sectors such as IT, pharma, export-oriented sectors and others

time-read
8 mins  |
December 2024
European Sojourn
Outlook Money

European Sojourn

Tight on budget? Dump the popular European destinations for the little-known wonders that are equally attractive

time-read
10+ mins  |
December 2024
Gold ETFs And FoFs
Outlook Money

Gold ETFs And FoFs

While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.

time-read
2 mins  |
November 2024