Vivek Iyer, Partner and CIO at Rational Asset Management, expects bears to intensify their selling in midcap, smallcap and microcap stocks. "And last week's fall is the start, not the end," he said in an interview with Moneycontrol.
Brent is now at $117 per barrel, and the mid- and small-cap universe is where the input cost lands first. Hence, "the selling continues until the estimates come down and the multiples meet them, and that does not happen in a week," he said.
Vivek Iyer expects crude above $100 a barrel for the rest of the decade. "A ceasefire takes the war premium out of the barrel, not a decade of underinvestment. A market cannot see a V-shaped recovery on falling estimates," he said.
Do you expect bears to intensify their selling in midcap, smallcap and microcap stocks, given their elevated valuations and lack of alignment with earnings growth?
Yes, and last week's fall is the start, not the end. The earnings have been strong: midcap profits grew over 30 percent in FY26 and about 20 percent in the June quarter. But those numbers were earned with crude at $70 to $90 a barrel, GST cuts in the base, and commodity tailwinds, and the multiples paid for them assume that run-rate continues.