Small-cap stocks in India and mega-cap stocks in the US are leading the charge of the bulls. But veteran investors caution both equity markets could be testing their limits. Here's why
The bulls on Dalal Street have been on a rampage: Benchmark indices hit fresh highs and the recent macroeconomic indicators suggest domestic growth is holding up even though the world economy is struggling. Many see this as the start of a multi-year bull-run. Some are cautious of the lurking dangers and have fastened their seat belts. But all are optimistic and quite confident of India’s long-term growth potential and superior market returns in the coming years.
Confoundingly, unlike most bull-runs in the past, the current rally in stock prices is not being driven by the large-cap stocks. Consider this: The top 10 Nifty 50 stocks contributed 41 percent of the index returns in the past three months. While Nifty 50 stocks returned 21.6 percent over a one-year period, Nifty Smallcap 250 rose over 30 percent during the same period (see table).