Over the past three years, the mid-cap segment of the equity markets has become the talking point for investors, given the dramatic run-up in the prices of these stocks. Since mid-2013, this segment has shown a sharp upturn, with the NSE Free Float Midcap 100 index rising over 100 percent, more than double the benchmark NSE Nifty 50. In a sense, the rise of the mid-caps reflects the unfolding story of Indian enterprise. In the recent past, new energy and drive, together with new ventures and ideas, have come to the fore. This important change is also being reflected in the equity markets by way of investor interest in the mid-caps space. The question, however, is: With valuations rising sharply, is the mid-cap boom sustainable? What is the outlook for this sector? With this in mind, Forbes India takes a close look at the mid-cap equities space, dissecting for you the pros and cons of this segment, with some top market experts also weighing in on what they feel is the road ahead.
While the mid-cap space is obviously more risky than large-caps, it has interesting stories that continue to excite the best fund managers. One such example is that of fund house DSP BlackRock, as our cover story will tell you. However, as Senior Associate Editor Pravin Palande—who helmed this package with Senior Assistant Editor Samar Srivastava—writes, “As the rally in mid-caps has far outpaced the growth in sales and profits of these companies, fund managers are becoming cautious.” For example, Sunil Singhania of Reliance Mutual Fund warns: “There will be issues related to valuation and one needs to be cautious.” Value investor Sanjay Bakshi says that future returns from mid-caps as a group are sure to be less than those witnessed thus far. Even so, with startups burgeoning and beginning to play a major role among Indian enterprises, the mid-caps space will continue to engage the minds of investors. How this segment plays out in the coming days will be fascinating to watch.
The new business environment is also bringing about change in another area in India: Management education. This issue highlights emerging trends in the management education space, with legacy institutions like the Indian Institutes of Management reorienting themselves (IIM Bangalore, in particular, is according sharp focus on startups), even as new challengers with fresh teaching philosophies seek to change the narrative. As leading management thinker Nirmalya Kumar tells Associate Editor Aveek Datta rather bluntly: “In a sense, management education has failed in the country. Otherwise, so many people wouldn’t be leaving the country to study abroad.” Clearly, it’s time for a rethink.
Editor, Forbes India
(This story appears in the 28 October, 2016 issue of Forbes India. To visit our Archives, click here.)