Motilal Oswal raises mid and smallcap allocation to 50%, stays neutral on Indian equities

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"We have increased our overweight to mid- and small-caps given their stronger representation in high-growth, new-economy sectors and the improvement in valuations," said Sandipan Roy, chief investment officer, Motilal Oswal Private Wealth.

For hybrid strategies, he recommends lump sum deployment at current levels, while pure equity-oriented strategies should be staggered given prevailing uncertainties. Roy said meaningful corrections could be entry points for aggressive exposures.

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Even in the case of healthcare the exposure in mid and small cap indices extends well beyond pharmaceuticals-capturing hospitals, diagnostics, biotechnology, CDMO, medical devices and healthcare technology, which are high growth areas.

FII flows are rotating away from benchmark-heavy sectors such as Financials, IT, FMCG and autos towards industrial and manufacturing themes like capital goods and metals, which have higher mid and small cap representation, thus reflecting improving FII preference for manufacturing led small and midcap opportunities.

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