Largecaps look better as smallcaps price in strong growth: Franklin Templeton’s Arihant Jain
Portfolio manager Arihant Jain suggests that large-cap stocks currently offer better value than mid- and small-cap stocks in the Indian market. He argues that large-caps have lower earnings expectations, providing more room for potential growth and re-rating.
Why it matters
Investors are re-evaluating market-cap strategies as small-cap valuations become stretched due to high growth expectations.
Largecap stocks may be better placed than their mid- and small-cap peers as investors have already priced in strong earnings growth in the broader market, according to Arihant Jain, portfolio manager for SIF and multi-factor funds at Franklin Templeton India.While mid- and small-cap stocks are factoring in 20% to 30% earnings growth, large-caps are being valued against more modest 10% to 12% expectations. That leaves greater room for earnings upgrades and a valuation re-rating in large-caps, Jain said. Edited excerpts from a chat:The Sapphire Equity Long-Short SIF can hold 75–100% in long positions and short up to 25%. What is the current long-short positioning, and what specific signals would make you deploy the full shorting limit?Our asset-allocation model determines our long and short exposure. Leverage is not allowed in India.
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