Interest rate signal from RBI is the key: Prashastha Seth

Prashastha Seth, Senior Fund Manager, IIFL Wealth, India Infoline, talks to ET Now on various stocks.

Do you think for small cap stocks now to move further up from these levels, large-cap stocks will have to catch up or small-cap stocks can move independently of large-cap action?

My sense is what we have seen in the last few days is essentially the stocks recovering from the massacre that is seen in December, so if you see from December 1 onwards and you try and compare the numbers from there from November, December onwards.

The underperformance that you saw in the last two months with respect to large caps has now gone away, so small caps have essentially made up for most of the losses that they see in those two months. For things to move from hereon, you need sentiment to become more incrementally positive and that's where interest rate signal from RBI is going to be extremely key.

So I would not subscribe to the theory that is small caps could continue to outperform without large-cap participation. Yes, it might happen for another 3-5 trading sessions but beyond that both of them would have to move in tandem.