90 smallcaps sink in double digits as index underperforms

Market This Week

• Indian markets posted worst weekly loss in 3 months amid global and FII concerns
• Small-cap index dropped 4%, lagging behind mid- and large-cap indices.
• Nifty trend remains weak; further downside possible if support at 25,700 breaks

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Broader market indices remained under pressure during the week, with mid- and large-cap indices declining around 2.5 percent each, while the small-cap index fell nearly 4 percent, significantly underperforming the benchmark indices. The markets posted their worst weekly performance in over three months, weighed down by rising geopolitical tensions, persistent FII selling, and concerns over potential US tariffs.

BSE Sensex index slipped 2,185.77 points or 2.54 percent at 83,576.24, while Nifty50 index shed 193.55 points or 2.45 percent at 25,683.30.

Sectorally, Nifty Oil & Gas, Nifty Energy, and Nifty Infra indices declined 4–5 percent during the week. Nifty Metal, Realty, Media, and Auto indices also remained under pressure, each slipping more than 2 percent. In contrast, the Nifty Defence index gained 1.3 percent, while the Nifty Consumer Durables index rose 1 percent.

Foreign Institutional Investors (FIIs) continued to remain net sellers during the week, offloading equities worth Rs 9,209.90 crore. In contrast, Domestic Institutional Investors (DIIs) provided support to the market, purchasing equities worth Rs 17,594.58 crore.

"Indian equities navigated the first full week of 2026 with caution, reflecting a corrective undertone. The week began on a muted note as expectations of higher government borrowing drove bond yields upward, though strong GST collections and healthy bank credit growth provided some support. Market sentiment, however, weakened amid global headwinds, including the Venezuela–US standoff, concerns over Russian oil imports, China’s restrictions on rare earth exports, and continued FII outflows," said Vinod Nair, Head of Research, Geojit Investments.

"Profit-booking in autos, metals, and oil & gas weighed on indices, while selective buying in consumer durables, on hopes of a demand revival, offered brief respite. The week ended on a cautious tone ahead of U.S. Supreme Court rulings on tariffs, with fears of additional levies under Russian sanctions overshadowing optimism around earnings recovery."

"Looking ahead, clarity on global trade dynamics and Q3 earnings will shape market direction. Volatility is likely to persist in the near term, particularly in US exposed companies and sectors such as metals and oil & gas. However, strong domestic fundamentals, resilient GDP growth and robust credit trends, could underpin selective buying where earnings prospects remain favourable."

"FII flows and currency movements will act as key monitorable, while any positive outcome from India–US trade discussions or easing tariff concerns could spark a short-term rebound. Overall, markets are expected to stay range-bound with a mixed bias, looking forth a balance between external risks and domestic fundamentals," he said further.

The BSE Small-cap index declined nearly 4 percent during the week, with heavy selling seen across several stocks. Shares of Systematix Corporate Services, Balu Forge Industries, Worth Investment & Trading, VTM, Kiri Industries, Sai Silks Kalamandir, Indian Metals & Ferro Alloys, Transformers and Rectifiers India, Stallion India Fluorochemicals, Wardwizard Innovations and Mobility, Baazar Style Retail, Elecon Engineering Company, Kitex Garments, Faze Three, and Sandur Manganese and Iron Ores tumbled between 15 and 23 percent.

Where is Nifty50 headed?

Rupak De, Senior Technical Analyst at LKP Securities

The Nifty has slipped further, moving lower from the 50 EMA, indicating increasing weakness. Bouts of selling pressure dragged the index to close at a several-day low. Market sentiment appears decisively negative. In the short term, the trend might remain weak, with potential downside towards 25,550–25,500. On the higher end, resistance is placed at 25,850.

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities

Nifty continued to slide down on Friday and closed the day lower by 193 points. After opening on a weak note, the market slipped into further weakness that continued for better part of the session. Minor recovery was seen towards the end and Nifty closed near the lows.

A long bear candle was formed on the daily chart with minor lower shadow. Technically, this market action indicates a sharp down trended movement in the market. A long bear candle was formed on the weekly chart that signals sharp reversal in the market after the consolidation movement of few weeks. This is not a good sign and indicates more weakness in the coming week.

The underlying trend of Nifty continues to be weak. A slide below the support of 25700 could open more decline down to 25400 in the coming week. Immediate resistance is placed at 25900.

Ajit Mishra – SVP, Research, Religare Broking

Market sentiment stayed subdued amid elevated geopolitical and global trade-related concerns, particularly renewed uncertainty around potential U.S. tariff actions and related Supreme Court developments. Persistent foreign institutional selling and weakness across broader risk assets further compounded the negative bias, while heavyweights also added to the downside pressure.

From a technical perspective, the decline has disrupted the short-term up move in the Nifty, with the index now retesting its medium-term support zone near the 100 DEMA around the 25,600 level. A decisive break below this could invite further pressure towards the 25,450 and 25,300 levels. On the upside, reclaiming the short-term moving average, i.e., the 20 DEMA around 26,000, may prove challenging. In the current environment, a selective approach with controlled position sizing and balanced exposure on both sides is advisable.

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