The broader market indices ended the session sharply higher - compared to a muted close for main benchmarks - supported by select shares on June 2, pushing the Nifty Smallcap index up nearly 1.2 percent and Nifty Midcap index by over 0.6 percent.
The outperformance extended last week’s trend, where both small and midcap indices recorded gains while benchmark indices remained muted.
Yes Bank was the top gainer on the Nifty Midcap 100 index, rising over 8 percent ahead of the lender's board meet on June 3 to consider fundraising.
Bank of Maharashtra shares followed, jumping nearly 7 percent, highest gain for the stock in over 20 weeks. PSU bank shares have seen a strong surge on June 2 on expectations that the Reserve Bank of India (RBI) could announce a rate cut at its upcoming Monetary Policy Committee (MPC) review later this week. Additionally, strong GDP numbers too supported shares on hopes of a strong credit demand.
Ola Electric, Prestige Estates and Indian Bank shares jumped around 5 percent each, while Union Bank of India shares rose over 4 percent each. Other notable midcap stocks which recorded strong gains include AU Small Finance Bank, Paytm, Glenmark Pharma, HUDCO, Bank of India, Federal Bank, Vodafone Idea, Bandhan Bank, Steel Authority of India (SAIL), MRF, IRCTC and more.
On the smallcap index, the shares of CDSL were the top gainer, rising nearly 10 percent on strong trading volumes. Karur Vysya Bank and Brigade Enterprises shares followed, rising over 7.5 percent each.
Reliance Power, IDBI Bank, CAMS, Kfin Technologies, Angel One, PVR Inox, Delhivery, Hindustan Copper, NCC, Nuvama, MCX, Titagarh Rail Systems, HFCL, NBCC and Radico Khaitan were some of the other notable names which recorded strong gains.
IFA Global said that valuations have moderated slightly during the last one week. “Nifty50 stands at 21x (from 22.7x), Midcap100 at 30.4x (from 32.9x), and Smallcap250 at 26.7x (from 29x),” it said.
Motilal Oswal Financial Services said the midcap companies have turned out to be 'surprise outperformers'.
"Our view for Q4FY25 has strengthened the structural case for midcaps. Overall earnings have surpassed estimates—a positive shift after three quarters of broad misses. Notably, the midcap segment emerged as a surprising standout, highlighting its key role in producing future growth leaders and expanding the market’s investable universe," Motilal Oswal said.
The brokerage added, "Smallcaps remain a barbell segment, capable of both strong rebounds and deep corrections. Earnings volatility remains high, and stock selection is critical. Investors should focus on quality names with sustainable business models, visibility, and operating leverage."
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