Sticking to smaller companies can be more fruitful

Over 1991-2017, the median PE for the bottom-decile has increased from 13.6 PE in 1991 to 29.6 PE in 2017

Saurabh Mukherjea of Ambit Capital has an interesting thesis: Relatively smaller corporates will consistently outperform larger corporates over the long term. He did a data-based study of the top 100 stocks in India since 1991. More specifically he compared the top 10 stocks of the BSE100 by market cap (top-decile) with the bottom 10 stocks (bottom-decile).

The study assumed annual rebalancing and an equal-weighted portfolio. He says that, between 1991 and 2000, the top-decile outperformed in terms of delivering capital gains. Between 2001 and 2010, the performance of the bottom-decile equalled that of the top-decile. 

But, between 2011 and 2017, the bottom-decile