Smallcaps Are Way Ahead of the Sensex in 2020

Feb 13, 2020

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After the Budget, I wrote to you about the importance of looking beyond the here and now.

One of the key differences I've observed between small winners and big winners in the stock markets is the range of their vision.

The small winner is myopic - focusing mostly on the "here" and "now".

He's not truly a long-term investor. His mood, expectations, outlook, and investing decisions are mostly shaped by the recent market events and price movements.

On the other hand, the big winner in the stock markets, is looking where very few people are looking - at big, long-term trends and companies that are poised to be great value creators in the long run.

I also shared insights from some interesting interviews of stock market veterans like Ruchir Sharma and Aswath Damodaran.

Neither of them talked about what's going to happen in 2020. Their focus was not on the next four quarters, but on the next decade.

In fact, even Ruchir Sharma believes in the smallcap rebound for this new decade.

You will be surprised to know the kind of trend we saw in the Indian markets was not unique. Even in the US stock markets, a select group of large companies dominated most of the gains.

For instance, between 2010 and 2019, large companies gained 230% in market capitalisation. Small companies, gained only 110%.

The contrast in the Indian markets was even more stark. Between 2010 and 2019, while large companies gained 115%, small companies gained merely 6%.

Isn't the dichotomy shocking?

Smallcaps have rarely been so depressed compared to largecaps.

And according to Ruchir Sharma, small companies are likely to rebound in the US.

I see no reason why that will not happen in India. In fact, the market trend since the start of 2020 tells us, it's already happening!

Since the start of 2020, smallcaps have beaten largecaps by a wide margin.

But this is just the start.

We believe smallcaps have a long way to go.

My colleague Richa Agarwal has nailed a high quality smallcap stock that could make big money for you in the ongoing smallcap rebound.

Are you ready to ride the smallcap rebound in this new decade starting 2020?

Data Source: BSE India

This Chart Of The Day was published in The 5 Minute WrapUp - Smallcap Rebound 2020: Here's What You Must Know Right Now

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