Largecap investments are reliable choice for any market scenarios: Bajaj Finserv Mutual Fund

The largecap funds have closed in the positive territory for 18 out of the last 21 years. The large cap index performed relatively better than mid and small caps during the falling, flat, and narrow market phases, according to a study by Bajaj Finserv Mutual Fund.

During the narrow market period from January 2018 to October 2019, the large-cap index has generated positive returns of 8.2%. In comparison, small caps and mid caps were negative, generating -39.0% and -24.1%, respectively. Similarly, from December 2010 to December 2013, when markets were flat, the large cap index generated 6.7% returns, while small caps and mid caps generated -19.6% and -12.0%, respectively, according to the study.

From December 2007 to December 2008, during a market downturn, the large cap index declined by around 55.0%. Small caps and mid caps fell much more, by 69.7% and 58.6%, respectively. When the market turned around, the large caps rebounded by 148% and regained their capital by September 2010, taking approximately 1.5 years to recover from their lowest point of the global financial crisis. In contrast, small caps required an additional 5.2 years, fully recouping their capital only by June 2014.


As per the study, large caps tend to be a relatively low-risk approach of investing in Indian equities than small and mid caps, especially at the present market valuation. The large caps tend to fall less than their peers in mid and small cap space and thus recoup their losses much faster when sentiment turns. The current valuation of the large caps is closer to the long-term average of 23.1, indicating that the large caps are in the fair value zone for long-term investors.

Overall, the Nifty 100 TRI has seen around 33x growth in the last 21 years and 17.4% since its inception. As per the study, if Rs 1 crore had been invested in large caps on January 1, 2003, the value on June 30, 2024 would have been Rs 33 crore now.

The study concluded that large caps are relatively attractive investments due to their reliable track record. These established companies tend to recover faster from market downturns and deliver relatively better returns even during tough times. This resilience is driven by their strong financials, diverse revenue streams, and experienced leadership. Large caps present a good opportunity for investors seeking a stable foundation for their portfolios with the potential for solid growth.