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Below the Quote on AMFI Data by Dr. Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital

“The largest flows in equity were in the flexicap category giving flexibility to the fund managers in terms of allocations across the market. However, if one looks at the total aum, the pure large cap has lower aum as compared to the midcap and just slightly higher than the smallcap aum. This is a matter of concern given that typically, large cap stocks as a percentage of overall market cap are approximately 70% under normal conditions and mid and small caps are approx 15%-20% and 10%-15%. This makes it clear that there is overallocation by retail into the midcap and smallcap categories. Nifty Midcap 50 is at a PE of 37, Nifty Midcap Select is at a PE of 47 and Nifty smallcap 250 is at PE of 33. Compare this to Nifty 50 is at PE of 22. The AUM data as well as the PE data clearly shows that there is overallocation to the midcaps and smallcaps and underallocation to largecaps. Investors would do well to reconsider their allocation, but it looks unlikely until the large cap index significantly outperforms the mid and smallcap indexes prompting the FOMO and trend chasing behaviour of retail investors.”

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