New Delhi, Aug. 7 -- U.S. small-cap stocks have lagged for the better part of two years. In a market where leadership has narrowed to a handful of technology giants, the Russell 2000 has largely moved sideways-under-owned, under-covered, and overlooked. But the groundwork for a shift is building quietly in the background, largely unpriced.

As of mid-July, the index is already showing signs of life, up nearly 10% since mid-June. Yet broader investor sentiment remains cautious. That may be a mistake. You don't need to believe in a full-fledged economic turnaround to position smartly here. Just one of four credible catalysts needs to play out to push small-caps into sustained recovery and the market is already watching.

Mid-July is when po...