India Smallcap Stocks Outperform but Risks Rise

Small-cap and mid-cap stocks are attracting increased investor attention as potential high-growth opportunities, especially amid mixed performance from large-cap indexes. In India, small-cap stocks have outperformed major indices like the Sensex and Nifty, but experts warn that valuations have become expensive and future growth may fall short of expectations. In the U.S., the Russell 2000 Index has posted a 40% gain over the past year, yet many small-cap firms are struggling with profitability and difficulties in raising capital amid higher interest rates. While certain stocks such as ACM Research and CarParts.com are seen as having strong growth potential, others like Ameresco and Resideo Technologies are noted for weak fundamentals and cash flow concerns. Mid-cap stocks, including Dick’s Sporting Goods, offer more stability and increasing dividends, making them appealing during market volatility. Investors are advised to be selective, focusing on financial health and market risks when considering small- and mid-cap stocks.