Should one continue to invest in the Nippon India Small Cap Fund?

Let us go systematically to understand Nippon India Small Cap Fund


  • They have a market capitalization of less than Rs 5,000 crore
  • High Growth Potential
  • Highly Volatile and prone to fluctuations during market corrections
  • Less Liquidity (money flow)
Capitalization: Method to differentiate companies listed in the Stock Market

Nippon India Small Cap Fund:

The open-ended fund was initiated on 16th September 2010

The Fund Manager is Samir Rachh

As of Sept 30, 2021, the allocation of the fund in the portfolio is as follows:

Asset Allocation of the Nippon India Small Cap Fund

Top 10 holdings of the Small-Cap Mutual Fund:

Software & Chemicals are given the major weightage in comparison to Finance and Pharma.

Top 10 Holdings of the Nippon India Small Cap Fund

Mutual Fund Performance & Metrics:

  • The Fund has beaten the BSE 250 Small-Cap Index handsomely
  • The return of Nippon India Small-Cap Fund is ~21% v/s ~12% for the BSE 250 Small-Cap Index
Performance of Nippon India Small Cap Fund v/s BSE 250 Small Cap Index
  • The scheme saw some terrible corrections during the last two years (2019 & 2020). Despite this, the fund has managed to recover since its low post-Covid-19 first wave and on the back of earnings post-Covid-19 second wave
  • At present, the portfolio stocks in the Mutual Fund have P/E exceeding 15 (this indicates that is overpriced)
  • The beta for the mutual fund is ~1.0 (bound for medium correction due to earnings downturn, economic downturn, etc.)
Stock Valuation: Price-to-Earnings Ration


  1. It is best to stay invested if you are in it
  2. If you are planning to stay afresh, do it via the SIP route only
  3. Do not enter via bulk/one-time buy route
  4. Do not try to time the correction
  5. Do not try to pull out your money/stop SIP if there is a correction as it takes time for small-cap funds to give good to exceptional results
Disciplined Investment: Systematic Investment Plan(SIP)

Hope this helps. If you like the article, feel free to share it with others.

Good Luck!!


  1. Difference between Large Cap, Mid Cap & Small Cap
  2. Small-Cap Stocks 101: Why the Risk is Worth the Reward
  3. Nippon India Small Cap Fund
  5. Price Earnings Ratio

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