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Writer's pictureEshan Tripathi

When am I going to buy Small Cap Funds?


Undoubtedly, the % increase that one can expect from peak-to-peak attained before two consecutive recessions is more for the entire market than just the small caps, owing to the fact that recessions lead to more adverse losses to smaller businesses than giants. As can be seen from the chart above for Nifty Small Cap 50, the gain has been mere 22% over the 10-year period, whereas the same for Nifty 50 over the same period was 94%.



However, when compared for the time range that matters today, from the consolidation phase after the recovery to the peak before next recession, the Small Cap index regained 223% as in the chart above against the change of 163% for Nifty 50. On the basis of this, planning to buy some quantity of Small Cap mutual funds in addition to regular ELSS makes sense to me. But to better my risk-to-reward ratio, I would wait for a little more time to check if the levels can reach strong support for Nifty Small Cap 50 around 3600 to buy-in into the index.

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