“It is obvious that mid caps are overvalued by any measure,” said Chakraborty. “Mid caps are now the single largest part of mutual fund AUMs.”
The mid caps will not crash; however, they might take a pause because, while the FY25 earnings take off, the FY24 earnings are not as good, he said.
The mid caps can go under in one of two conditions: either if there is a GDP surprise or if there is a severe discount, Chakraborty said.
“I think the mid caps will take a breather, as large caps in banking, auto, etc. start freaking out,” he said. Since the bull market is currently on, the large caps will do better, he said.
Mid-cap earnings growth could take off in FY25, driven by logistics, FMCG, cement, durables, consumer services, media, and textiles, Chakraborty said.