One month is too short to comment on overall market trends and one must not conclude one way or the other based on short term data. Having said that, we see that in April 2022, Nifty50 index has underperformed other broad indices. The small and midcap space showed strength. While Nifty50 fell by 3.2%, Nifty midcap 150 and Nifty midcap 250 corrected by 0.6% and 1.3% respectively. Nifty 100 and Nifty 500 multicap both underperformed these two, at -2.4% and  -1.6% respectively because of the significant presence of the Nifty 50 stocks in them. When one extends the time horizon from one month to the last 12 months the pattern is strikingly similar.

This does not mean that one jumps and invests in only small and midcaps. This space has a few thousand stocks though the midcap universe numbers at just 150 according to the standard definition. The small cap area is more crowded, and very small cap companies are more prone to volatile price changes. There are many established firms in the midcap space that have already run the marathon, and are worthy of consideration. Medium and long-term investors must be cautiously hopeful in these times and seek for rising firms that are keeping up with inflation and GDP growth. When investing, avoid using leverage and firms with excessive debt levels.

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