Beyond Blue Chips: What NRIs Get Wrong About Investing in India

For many NRIs, investing in India means sticking to large, familiar names. That instinct isn’t irrational. But it may be quietly expensive.

Mid and small-cap companies have outpaced large caps by a margin that compounds meaningfully over time. The trade-off is real: they swing harder in both directions. That volatility isn’t a bug — it’s the mechanism through which the returns are earned.

Before going further, one honest question: how much discomfort can you actually sit with — not in theory, but when your portfolio is down 35% and the news is grim?

NRIs carry a complexity most domestic investors don’t. You’re managing money across two countries, two currencies, and often two sets of financial obligations. When markets turn volatile, that pressure compounds. Large caps won’t make you rich quickly, but they hold up. Sometimes that’s exactly what you need.

But if your horizon is long and your finances are stable, the broader India growth story isn’t being written by its ten largest companies but by aggressively growing small and mid cap companies.

The real mistake is behavioral — chasing these stocks after a strong run, then abandoning them in a correction. That sequence captures the volatility perfectly, while missing the returns entirely.

Own both. Rebalance with discipline. Let your actual risk tolerance — not your aspirational one — determine the mix. India rewards patient capital. The investors who do well here are rarely the ones who picked the right stocks. They’re the ones who stayed.

– Shiva Duvvuru, CPA • Founder, Tax Circle Inc.