Don’t see blowout performance from largecaps, smallcaps a better play: Shankar Sharma

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Indian market lost momentum after hitting record highs in January. The Sensex is down over 800 points from its record high of 36,443.98, but the real carnage was seen in the small & midcap space, where stocks have fallen up to 90 percent so far in 2018.

Does that mean that the honeymoon period in the small and midcaps is over? Shankar Sharma, Chairman, First Global, said the fall may not be over. But he remains very optimistic on smallcaps as the correction there is not correlated with macros.

“There are many companies with visible growth trading at attractive valuations. I am hunting for companies trading without leverage. There are plenty of them out there,” he said in an exclusive interview with CNBC-TV18

Sharma said smallcaps offer respite as they are not related to macros such as oil or interest rates. "On the other hand, largecaps might be under pressure, so don’t expect a blowout performance from them at least for the next 1 year or so."

Commenting on the rise in interest rates, Sharma said it does pose a risk, with the macro picture looking problematic. "India has a widening current account deficit, thanks to a rise in crude oil prices. One should not forget the rate cycle, which has turned for the worst."

Sectorwise, he is betting on sectors such as steel, infrastructure, chemicals, and optical fibre cables as the opportunities in these sectors remain sizeable.