Harsha Upadhyaya, Chief Investment Officer at Kotak Mahindra Asset Management Company, has issued a cautionary advisory to investors regarding small-cap investments, citing significantly stretched valuations and disappointing earnings performance. The fund house, which manages assets worth nearly $6 billion, is recommending a strategic shift towards large and mid-cap stocks in the current market environment.

Small-Cap Valuations Remain Stretched

Upadhyaya highlighted that small-cap valuations are currently trading at levels 40-45% above their long-term averages, presenting substantial risk to investors. The concerning aspect extends beyond valuations, as small-cap earnings have consistently disappointed and even declined in some recent quarters, falling well short of growth expectations.

In contrast, large-cap valuations have moved closer to historical norms following a period of consolidation, making them more attractive for investment. Upadhyaya recommends that investors align their portfolios towards large and mid-caps based on their individual risk appetite, suggesting that a typical 5-10% allocation to small-caps within diversified funds remains adequate in the current market environment.

Market Volatility Expected to Continue

The market volatility witnessed in the previous year has carried forward into 2026, according to Upadhyaya's assessment. While the ongoing earnings season is expected to demonstrate decent recovery and provide support at lower levels, negative international news flow continues to act as a headwind for markets.

With broader market valuations hovering around long-term averages and earnings recovery still in its early stages, sharp market movements are likely to persist. This environment reinforces the need for careful stock selection and appropriate market cap allocation strategies.

Real Estate Sector Positioning

Kotak AMC has maintained an underweight position on the real estate sector for an extended period, a strategy that has proven beneficial given the sector's recent weak performance. Upadhyaya noted that Indian real estate is likely in the sixth year of an upcycle that typically spans eight to ten years, suggesting the sector is past the halfway mark of its current cycle.

While recent corrections could present selective buying opportunities, the fund manager emphasized caution and indicated the firm would avoid broad-based sectoral investments, remaining selective only if corrections deepen further.

Budget Expectations and Policy Outlook

Looking ahead to the Union Budget, Upadhyaya does not anticipate any major shifts in policy direction. The government's continued emphasis on fiscal prudence is expected to result in early double-digit growth in capital expenditure, with spending flows directed towards defense, renewables, and manufacturing sectors.

The policy framework is likely to maintain its current trajectory, with consumption continuing to benefit structurally from the goods and services tax (GST) system. This continuity in approach suggests sustained support for key infrastructure and manufacturing initiatives.

Precious Metals and Investment Strategy

Upadhyaya expressed a positive long-term outlook on precious metals such as gold and silver, supported by global trade tensions, geopolitical factors, and changing world order dynamics. However, he cautioned against chasing prices following their recent sharp increases, noting that assets moving in a vertical fashion typically experience subsequent volatility.

The recommended approach involves staggered investments with a long-term investment horizon to avoid fear-driven buying decisions. This strategy allows investors to benefit from potential opportunities while managing the inherent volatility in precious metals markets.

Tech Mahindra has recorded a significant block trade transaction on the National Stock Exchange (NSE), highlighting notable institutional activity in the IT services major's stock.

Block Trade Details

The transaction details demonstrate substantial market activity in Tech Mahindra shares:

Market Significance

Block trades represent large-volume transactions that are typically executed by institutional investors, mutual funds, or other large market participants. These transactions are conducted through special trading mechanisms designed to handle substantial volumes without significantly impacting the stock's market price during regular trading hours.

The transaction value of ₹54.05 crores indicates meaningful institutional participation in Tech Mahindra's stock, reflecting the continued interest of large investors in the company's shares. Such block trades often occur when institutional investors are rebalancing their portfolios or when there are significant changes in investment strategies.

Transaction Mechanics

The execution of 316,080 shares at ₹1,710.00 per share demonstrates the efficient handling of large-volume trades through the NSE's block trading platform. This mechanism allows for the smooth transfer of substantial share quantities while maintaining market stability and ensuring fair price discovery for all market participants.