While Shankar Sharma's penchant for smallcap stocks is well-known, the ace investor says that he likes to pick individual stocks and not really invest in any small-cap focused index.
While Shankar Sharma’s penchant for smallcap stocks is well-known, the ace investor says that he likes to pick individual stocks and not really invest in any small-cap focused index. “When I say I like small caps, the reality is that I don’t like a small-cap index but 10-15 small caps,” Shankar Sharma said in an interview with CNBC-TV18 on Saturday. Shankar Sharma revealed that his ‘biggest bet’ in the last two-and-a-half years has been in the chemicals space. “You go and look at the list of 7-8 stocks in that space. They have done phenomenally well,” he said, adding that his portfolio does not include stocks of just chemical companies.
According to Sharma, given the severe correction in the smallcap segment in the last 18 months, the sentiment on small caps have become extremely negative. “If you see a revival in the market on a technical basis — even if not on a fundamental basis — even on a high beta end of the market, it usually does well,” he added. Sharing how he copes with losses in the stock market, Sharma said that he treats them as a fee rather than a penalty. “So think about it as an entry price, if I take you to an amusement park and the guy tells you Rs 500 entry fee, you will happily pay but the guy at the ticket counter tells you, it is a Rs 500 penalty, you will never go there,” he said.
According to the expert, a unque factor to consider while investing in smallcaps is that they can plunge and rally without warning. “If you look at technicals for example large caps will make move after making formations whether on the top or on the bottom. It is fairly easy to figure out that this is a topping out situation or this is a bottoming out situation in large caps. But in small caps, it can be a vertical fall or a vertical rally with no formations, no chart formations, nothing at all,” he told the channel.