Jan 25, 2019

Comparison of 10 years chart of BSE Sensex and BSE SmallCap

This comparison on Google Finance shows that Small Cap gains sharply and correctly sharply than Sensex. Today, I read that Small Cap are cyclical. I see that is not right. I see here both gain together and fall together over longer period. Only point to remember is Small Cap is high beta.
Also to note is that bear market ends when small Cap touch Sensex. So, over longer period both gives almost same gain to you if we go by index.

Now, we need to understand that timing matters a lot here. We take high risk in SmallCap. But, if we remain invested then we can loose all gain in market correction as both indexes join each other over longer period. When market corrects then Small Cap comes down faster to touch Sensex.
Also, if we decide to remain invested in Stock Market in bear phase and correction is not over yet then shifting to large companies and high quality companies in respective sector is the only option in general.
Individual Stocks can perform differently. For example, any new company catching market share from larger companies. But, it is not easy to catch this. See, even after very good results by few, they are correcting in this correction.

Tried to check data for Nifty but Google Finance is not giving data older than 2016 for Nifty Small Cap 50 and SmallCap 250. This comparison over shorter period is meaningless. I think, BSE comparison given us fair idea.