Investors looking to invest in smallcap companies should focus on companies with strong balance sheets, without significant leverage. They should also consider the growth prospects of the company, its valuations and conduct due diligence on the reputation of the company and promoter. Companies that have paid healthy dividends to shareholders over a long period are preferred. Renaissance Investments' Pankaj Murarka has noted that he has turned positive on the traditional IT services and auto ancillary sectors due to increased production from OEMs.