Mid-Cap and Small-Cap Stocks Not Yet out of the Woods: Dhiraj Relli

In an interaction with Money Control, Mr. Dhiraj Relli, MD & CEO, HDFC Securities said that over the past year, both time and price corrections have been observed. He remarked that Indian markets have underperformed relative to global markets, describing India as a rank underperformer Mr. Relli recalled that such underperformance is unusual, citing that it took almost 289 sessions last year for markets to return to all-time high levels. He also agreed that portfolios are not looking favourable.

More Investors Have Gravitated Towards Small-Cap and Mid-Cap Funds

Mr. Relli observed that more investors have gravitated towards small-cap and mid-cap funds rather than large-cap funds. He cited data showing that in June 2021, individual investors held 18 percent ownership of the Nifty 50, whereas by June 2025, this reduced to just about 7.9 percent. He indicated that this shift clearly shows that individual investors are skewed towards small and mid-cap stocks. Consequently, even though markets are close to all-time high levels, portfolios are not reflecting strong performance.
Mr. Relli said that mid-cap and small-cap stocks are “not yet out of the woods.” He noted that valuations remain frothy in many pockets and emphasised the need for selectivity, warning that a longer price and time correction could occur in the mid-cap and small-cap segment.