Shankar Sharma says most large caps are fully priced; sees selective opportunities in mid , small caps

Shankar Sharma, Founder of GQuant Investech, believes that Indian equities may be entering the final leg of the ongoing bull market. In a conversation with Business Today on Wednesday, the market veteran urged investors to adopt a more cautious and realistic approach to return expectations, especially after several years of strong market performance.

“We’re no longer playing on an easy pitch,” Sharma observed, comparing the current market environment to a more challenging batting track that requires skill and patience.

“If we understand the nature of this pitch, we can still make runs — just don’t expect the same game we saw over the past five years,” he added. Sharma noted that most large-cap stocks are already more than fully priced and barring an earnings surprise, there’s limited scope for further upside.

However, the market specialist maintains a positive outlook on specific opportunities in the small- and micro-cap space, where he sees potential for significant gains.

Sector-wise, Sharma suggests a cautious stance on IT due to high valuations and a challenging growth outlook. While acknowledging the long-term structural potential of the defence sector, he feels current valuations are overheated.

On his personal investments, Sharma shared that he hasn’t made any fresh small-cap buys over the past three months but is actively evaluating new opportunities. He continues to stay bullish on Valiant Communications, a stock he has held since it was priced around Rs 200. Despite its substantial rally, he hasn’t booked profits and remains positive about its future.

He also revealed that his best long-term winners have been Amazon and Apple, both delivering over 100x returns, although he prefers booking profits at defined intervals rather than holding forever.

On portfolio strategy, Sharma advised a balanced mix. “Equity, debt, gold, even some crypto — everything has a role. Avoid extremes,” he said. For long-term wealth creation, he stressed the importance of staying away from hype and focusing on quality businesses with reasonable valuations.

Summing up, his message to investors was: don’t fear market cycles, but adapt strategies in line with changing conditions. “It’s no longer the free run we had over the last five years — now it’s about smart, selective investing.”

(Note: Valiant Communications has been placed under Enhanced Surveillance Measure (ESM) – Stage 2. ESM applies to main board companies with a market capitalisation (m-cap) under Rs 1,000 crore, based on parameters like price volatility, standard deviation and trading behavior.)