The consolidation in the stock markets might not be enough for the small and mid-caps due to their high valuation, according to Harsha Upadhyaya, chief investment officer-equity of Kotak Mahindra AMC.
The markets have been range-bound and in a consolidation phase over the last four to five months. The valuations in the small and mid-caps have been on the higher side for the past several quarters, he told NDTV Profit’s Niraj Shah in an interview. “It’s healthy for the markets as well.”
Large caps are at 5–6% higher than the long-term averages in terms of valuation at this point in time. Even if there is further volatility in the markets, it is unlikely that there will be a sharp drawdown at these levels, according to Upadhyaya. “However, the mid and small caps still continue to be very expensive.”