Trust MF CIO sees revival in corporate cycle, stays bullish on mid and smallcaps

India's midcap and smallcap stocks are leading a market recovery even as the broader index lags global peers, according to Mihir Vora, Chief Investment Officer at Trust Mutual Fund, which manages assets worth over $450.5 million as of the quarter ended March 2026.

Vora said, “The broad market results, especially in the midcaps and smallcaps, were really good, which meant that even in the March quarter the demand was quite strong, and that seems to be carrying forward into the broader market even now.”

He said that pattern is now playing out across the broader market — even with an ongoing war abroad weighing on sentiment.

Vora added, “We are just seen the beginning of the revival of the corporate cycle, etc. in India, and smallcaps and midcaps are where you can do the maximum amount of stock picking. Ultimately, it's all about alpha generation.”

Trust Mutual Fund is positioning around capital goods, infrastructure, and industrial stocks, Vora said, pointing to three overlapping themes: the government's push for self-reliant manufacturing (Atmanirbharta) in sectors like defence; demand for power-backup generators tied to AI data centre buildouts; and investment in transmission and distribution infrastructure.

One holding benefiting from this theme is engine maker Kirloskar Oil Engines, which Vora confirmed is part of the fund's small-cap portfolio.

On upcoming large IPOs, including those expected from major companies, Vora said "Supply will come only when there's demand," he said, adding that Trust Mutual Fund evaluates IPOs the same way it evaluates any other stock: on valuation.

Vora said the fund remains fully convinced on renewable energy, particularly solar, which he described as the power source that can be scaled up fastest globally compared with nuclear, hydro, or thermal plants.

Trust Mutual Fund is playing the theme mainly through transmission and distribution companies — since renewable power requires more grid infrastructure than conventional sources — and through solar suppliers serving commercial clients such as data centre operators.

Financials are the one sector where Trust Mutual Fund's bullish call hasn't yet paid off, Vora acknowledged. The fund has moved from overweight to neutral on the sector after a prolonged wait for non-banking financial companies (NBFCs) and banks to perform.

He said easing of foreign currency deposit inflows and improving liquidity could eventually lower funding costs and trigger a turnaround, but the fund hasn't yet gone back overweight.

Within financials, Vora said NBFCs currently look more attractive than banks, though private-sector banks still carry more weight in the fund's overall financials allocation than public-sector banks, purely because of their larger index weighting.

For the entire discussion, watch the accompanying video

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