Largecaps could finally have their day in Samvat 2083, says TCG AMC’s Shahzad Madon

Largecaps, which have lagged mid- and smallcaps for much of 2026, could finally regain market leadership in Samvat 2083 as investors turn to businesses with stronger balance sheets, credible management and sustainable earnings growth, according to TCG AMC’s Shahzad Madon.

Madon sees opportunity in beaten-down private banks and IT services, while identifying energy security, decarbonisation, defence, electronics, digital infrastructure and mobility as key structural themes. He also notes that the Nifty Midcap 150 and small-cap index have already fallen about 11% and 9%, respectively, from their 52-week highs.

Edited excerpts from a chat:


Indian equities have seen a sharp correction, with largecaps underperforming mid- and smallcaps in 2026. As we step into the new Samvat 2083, which segment do you think will outperform - large or mid/smallcaps?

The recent market correction has been significant. As of 27 October 2026, the Nifty Midcap 150 had declined approximately 11% from its 52-week high reached in August, while the small-cap index had fallen around 9% from its 52-week high reached in September. There are abundant attractive opportunities across large, mid and smallcap segments. The priority should be to select businesses with strong balance sheets, credible management, sustainable competitive advantages and valuations supported by good earnings growth trajectory.

Amid the ongoing earnings season, which sectors have surprised you positively and why?

The earnings season is still underway, with the overall picture evolving as more companies report their results. So far, small- and mid-cap companies have delivered encouraging growth, while large-cap earnings have also been healthy. At the sector level, bank results have been encouraging, automobiles have surprised positively, while energy has been particularly strong. Capital Goods / Engineering companies has also shown encouraging trends, although only a limited number of companies have reported so far

Private banks, IT companies and consumer stocks are trading near multi-year valuation lows. Which sectors currently offer the best risk-reward opportunity?

Private banks, IT services and consumer stocks are trading at attractive valuations. We believe both private banks and IT services offer opportunities at current levels. In IT services, some of the prevailing pessimism may be overstated. While AI is undoubtedly having an impact on the sector, we believe the market may be pricing in some of these concerns too aggressively, creating potential opportunities over the medium to long term. In the private banking space, we are focusing on small banks with robust fundamentals and strong earnings growth potential.

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If an investor has ₹10 lakh to invest this Diwali with a five-year horizon, how would you allocate it across largecaps, midcaps, smallcaps, debt, gold and international equities?

The appropriate asset allocation depends on an investor’s risk appetite, return expectations, age, income stability and existing wealth, making it difficult to prescribe a one-size-fits-all approach. In general, a well-diversified portfolio across asset classes is essential.

We believe Indian market valuations are more attractive compared to that of other major markets. Other markets are currently at all-time high, or influenced significantly by one major theme such as AI. From a five-year perspective, we believe Indian equities have the potential to deliver handsome returns despite near-term headwinds. However, within Indian equities, to generate alpha, disciplined stock selection and a focus on fundamentally strong businesses with sustainable earnings growth will be more important in identifying long-term wealth creation opportunities.

Samvat 2082 was marked by volatility, FII selling and a sharp divergence between largecaps and mid- and smallcaps. What are the key lessons investors should carry into Samvat 2083?

The key lessons for Samvat 2083 are that returns are ultimately driven by earnings, making it essential to focus on businesses with reasonable valuation and strong structural earnings growth. Volatility should be viewed as a friend rather than a threat, as it can create attractive entry points or top-up opportunities on existing investments. It is equally important not to get carried away by short-term news flow, whether positive or negative.

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IT stocks have staged a sharp rebound after months of underperformance. Can the sector sustain this momentum in Samvat 2083?

We believe AI led depletion will be over by next few quarters. But at the same time, AI is likely to bring significant changes to existing business models, creating individual winners and losers. However, the prevailing pessimism surrounding Indian IT services is overstated, which could present select opportunities for investors in the sector over the long term.

Which sector do you think can turn out to be the dark horse in the next one year?

We remain bullish on the investment themes we have been pursuing, which we believe have strong long-term structural growth potential. Key areas of focus include energy security and decarbonisation, defence and electronics, digital infrastructure, and mobility. Additionally, large caps, which have underperformed for a prolonged period, could see a relative improvement in performance over the next year.