Mid-cap & Small-cap stocks (& mutual funds) are witnessing a major correction since budget in Jan-18. One of the reason is the SEBI’s new guideline on stock categorization, resulting in Mutual funds correcting & realigning based on new guideline.
On the other hand, NIFTY is close to an all-time high now, but what one needs to understand is that, historically we have witnessed these scenarios again and again, i.e.a surge in the market over a period of years, after a massive plunge.
This includes the year 2003 when after the market plummeted, NIFTY Mid Cap and BSE Small Cap Indices have grown at the rate of 75% and 99% CAGR for the next 3 years. This theory is further bolstered when after reaching a low in 2007, NIFTY Mid Cap and NIFTY Small Cap grew at an absolute rate of 68% and 25% respectively. Last but not the least, 2013 also serves as a perfect example when NIFTY Mid Cap and NIFTY Small Cap grew at an absolute rate of 134% and 142% respectively after the shoddy performance.
All of this brings us to the current scenario, where we are witnessing the same volatility in the market where the NIFTY Mid Cap and NIFTY Small Cap have ALREADY CORRECTED 26% and 16% respectively FROM ITS ALL TIME HIGH. But nothing should deter us from making further investments looking at the growth opportunities. Therefore, this gives us the clue to invest in niche Mid & Small Cap Funds.
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