Helios Mutual Fund CEO Dinshaw Irani revealed that his team is actively increasing exposure to mid-cap and small-cap stocks despite valuation concerns. According to reports from ET Now, Irani stated that the portfolio mix is changing, moving away from large-caps and getting into small-and mid-caps, with the overall portfolio shifting in this direction. The fund manager emphasized that they continue to look at mid-and small-caps, with the portfolio composition reflecting this strategic pivot. As per The Economic Times, the move follows earnings growth trends where mid and small companies are showing much higher growth than large companies, with the fund adding Adani Enterprises, Dixon Technologies, and CAMS to its portfolio.
The latest earnings data reveals a stark divergence between large-cap and mid-cap/small-cap performance, reinforcing the strategic shift. According to The Economic Times, Nifty 50 earnings grew just 6% in Q4 FY26 compared to 28% growth for midcaps and over 41% for smallcaps. This earnings momentum has driven the portfolio reallocation, with Irani noting that "Wherever the correction has happened, we have been picking up the mid and smallcaps. We are moving away from largecaps and getting into new names in these segments wherever possible." The fund has exited Tata Motors CV and Titan in May, with the Tata Motors commercial vehicle position trimmed due to concerns over rising crude oil prices affecting CV demand sustainability.
According to ET Now reports, mid-caps led the gains on a month-on-month basis in May, with metals, capital goods, and healthcare sectors emerging as top performers. However, within the Nifty index, the performance was mixed - only 24 constituents ended higher on a month-on-month basis, with Adani Enterprises, Tata Motors and Grasim Industries among the top gainers. Major laggards included ONGC, SBI and ITC. For the year so far, 31 Nifty stocks have declined, with IT services companies and ITC featuring prominently among underperformers. As per The Economic Times, the fund is avoiding metals/cyclicals, US-facing pharma, consumer durables (ACs), and largecap banks due to specific sectoral concerns.
As reported by ET Now, several mid- and small-cap-heavy sectors and companies have scaled new all-time highs. On a 12-month forward price-to-earnings basis, private banks, consumer, technology and retail sectors are trading at discounts of 35%, 10%, 26% and 32% respectively to their 10-year averages. In contrast, sectors such as automobiles, capital goods, non-lending NBFCs, healthcare and chemicals are trading at premiums, with capital goods commanding a steep 56% premium over its long-period average. Private banks are trading at a 24% discount to their long-term price-to-book average. However, on a price-to-earnings-to-growth (PEG) basis, smallcaps are currently the cheapest segment of the Indian market, followed closely by midcaps, while largecaps, despite looking optically cheap on PE, turn out to be the most expensive once growth is accounted for.
The upcoming $3.55 trillion IPO storm from SpaceX and Anthropic represents one of the largest liquidity events in market history, creating significant concentration risk. As reported by 24/7 Wall St., these companies are expected to command roughly $3.55 trillion in combined market value, larger than the entire economies of several developed countries. The massive valuation will force major portfolio reallocations, with funds tracking broad indexes needing exposure and active managers potentially facing performance pressure if the stocks outperform. While the U.S. equity market has capacity to absorb large offerings, the concentration risk becomes elevated when investors collectively decide that these companies represent the next decade's defining growth stories.
