Nifty loses 4% as monthly SIP inflows favor midcaps and smallcaps over largecaps

The Nifty 50 index dropped 4% in its fifth consecutive week of losses. The broad market downturn started in the second week of August and continues into September with a total fall of nearly 2%. Largecaps trade at roughly a one-year-forward P/E of 21x, matching their long-term average. Midcaps carry a premium of 26% to 30% over historical norms, while smallcaps are up nearly 50% above averages. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, explained that most steady monthly savings plans are flowing into mid and smallcap segments despite these elevated valuations. He stated a return to mean levels in the broader market was overdue. Analysts suggest this trend reversal could allow fundamentally sound largecaps to lead recovery.