Smallcap SIPs: Sorbh Gupta suggests a five-year horizon

Investors considering Indian smallcap stocks could adopt a five-year systematic investment plan, provided it fits their financial goals and capacity to absorb market swings, according to Sorbh Gupta, Head of Equity at Bajaj Asset Management Limited.

In an interview with Kshitij Anand published by Economic Times Markets on October 23, Gupta paired that suggestion with a valuation warning: mid-cap and small-cap indices still look relatively expensive, even though individual opportunities may be more reasonably priced. His assessment was more favourable towards largecaps, whose valuations he placed below their 10-year historical average on the measures he considered.

Deployment strategy depends on the ability to absorb losses

Gupta did not prescribe one investment method for all investors. Those with a higher appetite for risk and the ability to withstand short-term volatility could consider lump-sum investment in large-cap stocks, depending on their goals and risk profile.

For investors concerned about further market swings over the coming months, he identified staggered deployment as an alternative. His five-year SIP suggestion for smallcaps was similarly conditional on investment horizon and tolerance for fluctuations—not a prediction of a particular return.

The valuation comparison also needs context. Gupta did not identify the valuation measures or give numerical multiples in the published interview, so his large-cap assessment should be read as an attributed investment view rather than a fully specified comparison.

Earnings offer support; oil and global uncertainty remain risks

Gupta attributed pressure on equities to geopolitical uncertainty and a steep rise in Brent crude prices. He said speculation about reductions in long-term capital gains tax and securities transaction tax may have helped sentiment, but explicitly described those possible changes as unconfirmed.

He viewed the medium-term outlook as reasonable, with earnings announced so far in the quarter broadly meeting or exceeding market expectations. Near-term trading could nevertheless remain volatile as global economic risks and possible government responses affect expectations.

Looking at the next six to 12 months, Gupta said an emerging earnings recovery and surplus domestic liquidity following Foreign Currency Non-Resident deposit inflows could support equities. A recovery in foreign investor flows and stronger global risk appetite would also influence the market’s direction.

He identified US interest rates, bond yields and rupee stability as important variables for foreign investment. Higher crude prices, he said, could widen India’s current account deficit and put pressure on the fiscal deficit if the increase is not passed through to consumers.

Consumption remains central to India’s investment case

Gupta argued that India remains primarily a consumption-driven economy, estimating consumption at about 60% of GDP. Manufacturing and productivity-related opportunities are developing alongside that base, with precision engineering and aerospace engineering among the areas attracting investment.

He also described a possible route for global capital to return to India. After substantial allocations to US technology, artificial-intelligence infrastructure and related beneficiaries over the past two years, investors could reassess expensive positions. A broader focus on consumption and other market segments could favour India, although he presented this as a possibility dependent on market conditions.

Banks, pharma and autos feature in his earnings outlook

Gupta identified large private banks, pharmaceuticals—particularly contract research and manufacturing—and consumer discretionary businesses led by automobiles as relatively well positioned for earnings growth.

He was more cautious about information technology services. Following the sector’s recent rally, he said continuing uncertainty called for selective investing because some companies could be vulnerable to earnings disappointments.

These are Gupta’s market assessments, not assured outcomes or personalised investment recommendations.