Why does Agarwal prefer largecaps over smallcaps?
His argument rests on valuations. Since December 2022, he says, the Nifty has returned about 5% a year while earnings grew about 8% a year. Largecaps got cheaper even as the companies earned more.
Smallcaps went the other way. The Nifty 250 smallcap index returned about 9% a year against roughly 6% earnings growth, so investors paid more for each rupee of profit.
Think of two shops. One now earns more but sells at a lower price tag. The other earns less and sells at a higher one. At the index level, he prefers the first. He still sees bottom-up opportunities across the market, meaning individual stocks can work in any size bucket.
Which sectors does he like?
The list is broad and built around the idea that prices fell more than the businesses deteriorated.
| Sector | His reasoning |
|---|---|
| Financial services | Select private banks and NBFCs; earnings improved over six months, prices have not caught up, credit quality is healthy, spreads are stable |
| Consumer staples and tobacco | Entry point after big corrections; strong dividend yields in select stocks |
| Microfinance | Valuations down sharply over 3-4 years, some below book value; drought stress is a risk |
| Offline retail (clothing) | Share prices fell more than business performance justifies |
| Chemicals and pharma | Select names look attractive; he advises a longer-term view despite input-cost worries |
| Exporters | Apparel, engineering, chemicals and contract manufacturing, helped by widening export markets |
| Hospitals | Comfortable despite possible price caps; India needs more infrastructure |
Book value, for reference, is what a company’s assets are worth on paper after debts. A stock trading below it is priced as if the business is worth less than its accounts say.
Why is he avoiding IT services?
His reason is blunt: the long-term effect of AI on the IT services business model is unclear. If clients can automate work that used to be billed by the hour, revenue growth is harder to forecast.
The market has already reacted. Business Standard reported in January 2026 that IT firms were bracing for subdued growth, with furloughs and lower utilisation weighing on quarterly revenue. Searches also point to a steep February 2026 fall in the Nifty IT index tied to AI fears, though I could not confirm the exact figure from a primary source.
Cheap does not mean safe here. Agarwal’s point is that the risk is about the business model, not just one weak quarter.
What is the problem with oil marketing companies?
OMCs such as IOC, BPCL and HPCL buy crude, refine it and sell petrol, diesel and LPG. Agarwal’s concern is policy: they do not fully control retail fuel prices, so a crude spike can hit margins with no easy way to pass it on.
The June 2026 quarter showed the effect. According to Outlook Business, all three state-run OMCs swung to losses, with HPCL’s the largest at ₹11,526 crore. Domestic LPG losses rose from ₹80 a cylinder in the March quarter to ₹510 in the June quarter. Refining margins cushioned the blow: BPCL’s gross refining margin was $41.4 a barrel.
For more on how crude is moving, see our piece on why credit concerns, not demand, drove a recent chip selloff for a sense of how fast sentiment can flip.
What risks does he flag?
He points to frequent regulatory changes in hospitals, insurance distribution and brokerage, which make investors cautious. He wants a stable policy framework for the next five years.
He also names uncertain global energy and transport costs and raw material price swings as threats to earnings. Our opinion: a list this wide is a reminder that “largecap” is not a synonym for “safe.”
Is this a consistent view from Agarwal?
Partly. In a September 2025 Motilal Oswal report, he was reported as preferring financials and export-oriented companies and expecting a consumption revival after GST reforms. The financials and exporters tilt has held. The explicit largecap call and the IT and OMC avoidance are new in the October 2026 interview.
What happens next
Watch three things: Q2 FY27 earnings from banks and NBFCs, to see whether profit gains finally show up in share prices; IT guidance for FY27 on AI-related pricing pressure; and any change in how retail fuel prices are set. Agarwal’s own timeframe is 12 months, so judge the call against that, not against a few sessions.
FAQ
Who is Ashwini Agarwal?
He is the founder and partner of Demeter Advisors, an Indian investment adviser, and a regular guest on business television.
Why does he prefer largecaps?
Largecap valuations compressed since December 2022 while earnings grew, whereas smallcap valuations expanded. He sees better odds in the cheaper group over 12 months.
Why does he avoid IT and OMCs?
For IT, the long-term effect of AI on the business model is unclear. For OMCs, the companies do not fully control petrol and diesel pricing, which creates policy uncertainty.
Next step: read the original interview summary, then compare his views with the next round of quarterly results.
This article is for information only and is not investment advice.
Ashwini Agarwal, founder and partner at Demeter Advisors, argues that largecaps offer better odds than smallcaps over the next 12 months, and he names financial services and consumer staples as places to look. He is staying away from IT services and oil marketing companies (OMCs), citing AI uncertainty and policy risk.
The views were reported by CNBC-TV18 and carried on TradingView on 24 October 2026. Here is what he said, the numbers behind Ashwini Agarwal’s largecaps call, and how it fits the wider market.
Key takeaways
- Agarwal says the chance of making money in largecaps over 12 months is “far higher” than in smallcaps at the index level.
- He likes select private banks, NBFCs, consumer staples, offline retail, chemicals, pharma, exporters and hospitals.
- He avoids IT services (AI’s effect on the business model is unclear) and OMCs (pricing is not fully in their control).
- This is one fund manager’s opinion, not a forecast.
Why does Agarwal prefer largecaps over smallcaps?
His argument rests on valuations. Since December 2022, he says, the Nifty has returned about 5% a year while earnings grew about 8% a year. Largecaps got cheaper even as the companies earned more.
Smallcaps went the other way. The Nifty 250 smallcap index returned about 9% a year against roughly 6% earnings growth, so investors paid more for each rupee of profit.
Think of two shops. One now earns more but sells at a lower price tag. The other earns less and sells at a higher one. At the index level, he prefers the first. He still sees bottom-up opportunities across the market, meaning individual stocks can work in any size bucket.
Which sectors does he like?
The list is broad and built around the idea that prices fell more than the businesses deteriorated.
| Sector | His reasoning |
|---|---|
| Financial services | Select private banks and NBFCs; earnings improved over six months, prices have not caught up, credit quality is healthy, spreads are stable |
| Consumer staples and tobacco | Entry point after big corrections; strong dividend yields in select stocks |
| Microfinance | Valuations down sharply over 3-4 years, some below book value; drought stress is a risk |
| Offline retail (clothing) | Share prices fell more than business performance justifies |
| Chemicals and pharma | Select names look attractive; he advises a longer-term view despite input-cost worries |
| Exporters | Apparel, engineering, chemicals and contract manufacturing, helped by widening export markets |
| Hospitals | Comfortable despite possible price caps; India needs more infrastructure |
Book value, for reference, is what a company’s assets are worth on paper after debts. A stock trading below it is priced as if the business is worth less than its accounts say.
Why is he avoiding IT services?
His reason is blunt: the long-term effect of AI on the IT services business model is unclear. If clients can automate work that used to be billed by the hour, revenue growth is harder to forecast.
The market has already reacted. Business Standard reported in January 2026 that IT firms were bracing for subdued growth, with furloughs and lower utilisation weighing on quarterly revenue. Searches also point to a steep February 2026 fall in the Nifty IT index tied to AI fears, though I could not confirm the exact figure from a primary source.
Cheap does not mean safe here. Agarwal’s point is that the risk is about the business model, not just one weak quarter.
What is the problem with oil marketing companies?
OMCs such as IOC, BPCL and HPCL buy crude, refine it and sell petrol, diesel and LPG. Agarwal’s concern is policy: they do not fully control retail fuel prices, so a crude spike can hit margins with no easy way to pass it on.
The June 2026 quarter showed the effect. According to Outlook Business, all three state-run OMCs swung to losses, with HPCL’s the largest at ₹11,526 crore. Domestic LPG losses rose from ₹80 a cylinder in the March quarter to ₹510 in the June quarter. Refining margins cushioned the blow: BPCL’s gross refining margin was $41.4 a barrel.
For more on how crude is moving, see our piece on why credit concerns, not demand, drove a recent chip selloff for a sense of how fast sentiment can flip.
What risks does he flag?
He points to frequent regulatory changes in hospitals, insurance distribution and brokerage, which make investors cautious. He wants a stable policy framework for the next five years.
He also names uncertain global energy and transport costs and raw material price swings as threats to earnings. Our opinion: a list this wide is a reminder that “largecap” is not a synonym for “safe.”
Is this a consistent view from Agarwal?
Partly. In a September 2025 Motilal Oswal report, he was reported as preferring financials and export-oriented companies and expecting a consumption revival after GST reforms. The financials and exporters tilt has held. The explicit largecap call and the IT and OMC avoidance are new in the October 2026 interview.
What happens next
Watch three things: Q2 FY27 earnings from banks and NBFCs, to see whether profit gains finally show up in share prices; IT guidance for FY27 on AI-related pricing pressure; and any change in how retail fuel prices are set. Agarwal’s own timeframe is 12 months, so judge the call against that, not against a few sessions.
FAQ
Who is Ashwini Agarwal?
He is the founder and partner of Demeter Advisors, an Indian investment adviser, and a regular guest on business television.
Why does he prefer largecaps?
Largecap valuations compressed since December 2022 while earnings grew, whereas smallcap valuations expanded. He sees better odds in the cheaper group over 12 months.
Why does he avoid IT and OMCs?
For IT, the long-term effect of AI on the business model is unclear. For OMCs, the companies do not fully control petrol and diesel pricing, which creates policy uncertainty.
Next step: read the original interview summary, then compare his views with the next round of quarterly results.
This article is for information only and is not investment advice.
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