{"id":3211,"date":"2022-03-04T10:36:19","date_gmt":"2022-03-04T10:36:19","guid":{"rendered":"https:\/\/www.paytmmoney.com\/blog\/?p=3211"},"modified":"2022-03-04T10:43:29","modified_gmt":"2022-03-04T10:43:29","slug":"4-reasons-why-indian-investors-investing-smallcaps-2022","status":"publish","type":"post","link":"https:\/\/www.paytmmoney.com\/blog\/4-reasons-why-indian-investors-investing-smallcaps-2022\/","title":{"rendered":"Check Out Why Indian Investors Are Investing In Smallcaps In 2022"},"content":{"rendered":"<h2><b>1. Is now a good time to invest in Smallcaps?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Currently, the economy is riding post-covid recovery momentum and has entered a high growth cycle. Stocks across Indian equity markets are riding this momentum to generate alpha. This is especially more pronounced in well-performing midcaps and low caps which can outperform the Large caps.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Across the last 16 years, the top Smallcaps have been high alpha generators in growth cycles and the current growth cycle opens up opportunities for investors.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The top Smallcap sectors like Financial Services, IT, and Consumer goods with constituents such as the Indian Energy Exchange Ltd, the Central Depository Services (India) Ltd, and IDFC Ltd present an attractive option for investors with a reasonable risk appetite.&nbsp;<\/span><\/p>\n<h2><b>2. What should you look for in Smallcaps for your portfolio?<\/b><\/h2>\n<p><b>&nbsp;<\/b><span style=\"font-weight: 400;\">When looking at Smallcaps, three important factors become important to judge the potential of performance<\/span><\/p>\n<h3><b>1. Quality<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Strong promoter pedigree, corporate governance, and management with soundtrack record of execution.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Capable of sustaining good RoEs* and RoCEs*<\/span><\/li>\n<\/ul>\n<h3><b>2. Scalability<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A business model with sustainable multi-year growth potential.<\/span><\/li>\n<\/ul>\n<h3><b>3. Stability<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Offers sustainable return potential with lower volatility&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ability to withstand event shocks&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Sound balance sheet<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Investors have to be picky with their choice of investments. Small caps have higher growth potential, but also a higher risk<\/span><\/p>\n<h2><b>3. How can Investors balance the risks of investing in small caps?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">To simplify the investment decision and distribute risk, an appropriate option is investing in an Index with tight selection and exclusion factors to manage risk. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">It shifts the focus from an active investment approach to a passive approach that relies on the market\u2019s ability to identify niche high-performing stocks. The NIFTY Smallcap 50 Index manages risk through a comprehensive index methodology that retains the top 50 smallcaps.&nbsp;&nbsp;<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The index represents the top 50 companies selected based on average daily turnover from the top 100 companies selected based on full market capitalization in the NIFTY Small cap 250 Index.&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">NIFTY Smallcap 50 Index is computed using free-float market capitalization method, wherein the level of the index reflects the total free-float market value of all the stocks in the index relative to a particular base market capitalization value.&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The index is re-balanced on a semi-annual basis.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Inclusion Factors of the Index include<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Companies must form part of NIFTY Smallcap 250.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Preference for top 30 companies by an average daily turnover from the 100 largest Smallcap companies by full float market cap&nbsp;<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Exclusion Factors of the Index include<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rank based on full market capitalization falls below 130 in NIFTY Smallcap 250<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The average daily turnover rank falls below 80 out of the top 130 constituents&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Exclusion from NIFTY Smallcap 250 Index Special factor for Newly listed Companies Criteria checked based on the data for three months instead of a normal six-month period for older listed companies&nbsp;<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The balance of the inclusion and exclusion factors creates a tight pocket to contain the risk of the index and create a more stable portfolio of small-caps.&nbsp;<\/span><\/p>\n<h2><b>4. How can you explore NIFTY Smallcap 50 Index?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">If you\u2019re interested in exploring <\/span><b>NIFTY Smallcap 50 Index<\/b><span style=\"font-weight: 400;\">, you can do so with the <\/span><span style=\"font-weight: 400;\">Axis NIFTY Smallcap 50 Index Fund NFO <\/span><span style=\"font-weight: 400;\">through the Paytm Money app.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Smallcaps are an attractive proposition for Indian Investors in the current growth cycle. The Axis NIFTY Smallcap 50 Index Fund NFO is an attractive option for investors looking to leverage small caps for returns while distributing the high associated risk across the top-performing smallcaps.&nbsp;<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">&nbsp;<a class=\"fasc-button fasc-size-large fasc-type-glossy fasc-rounded-medium\" style=\"background-color: #004393; color: #ffffff;\" target=\"_blank\" href=\"https:\/\/www.paytmmoney.com\/dl\/mf-details\/details?isin=PMF6631CKL8X\" rel=\"noopener noreferrer\">Explore the Axis NIFTY Smallcap 50 Index Fund NFO<\/a><\/span><\/p>\n<p>&nbsp;<\/p>\n<p>Disclaimer:<\/p>\n<p><span style=\"font-weight: 400;\">Mutual Fund investments are subject to market risks, read all scheme related&nbsp;documents carefully.&nbsp;Paytm Money Ltd SEBI Reg No. INA100009859 Regd Office: 136, 1st Floor, Devika Tower, Nehru Place, Delhi \u2013 110019. The NFO offering is non Exchange traded products and Paytm Money Ltd (PML) is acting as an agent for distributing the same. Please&nbsp;note all disputes with respect to the distribution activity, would not have access to the&nbsp;Exchange investor redressal forum or Arbitration mechanism. This information is&nbsp;purely based on publicly available data (Data source: Axis NIFTY Smallcap 50 Index Fund NFO SID and KIM, www.moneycontrol.com, www.business-standard.com, www.livemint.com,NSE) and in no way to be considered as advice or recommendation. The securities quoted are exemplary and are not recommendatory.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>1. Is now a good time to invest in Smallcaps? Currently, the economy is riding post-covid recovery momentum and has entered a high growth cycle. Stocks across Indian equity markets are riding this momentum to generate alpha. This is especially more pronounced in well-performing midcaps and low caps which can outperform the Large caps. Across<a href=\"https:\/\/www.paytmmoney.com\/blog\/4-reasons-why-indian-investors-investing-smallcaps-2022\/\">Continue reading <span class=\"sr-only\">&#8220;Check Out Why Indian Investors Are Investing In Smallcaps In 2022&#8221;<\/span><\/a><\/p>\n","protected":false},"author":27,"featured_media":3212,"comment_status":"open","ping_status":"open","sticky":false,"template":"single-classic-ns.php","format":"standard","meta":{"footnotes":""},"categories":[18,6],"tags":[],"class_list":["post-3211","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-nfo","category-personal-finance"],"_links":{"self":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts\/3211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/comments?post=3211"}],"version-history":[{"count":0,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts\/3211\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/media\/3212"}],"wp:attachment":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/media?parent=3211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/categories?post=3211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/tags?post=3211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}