More stocks fall above 10% in mid-small caps than Nifty 50 index

markets

• Large-cap stocks show resilience as mid- and small-caps see deeper corrections
• Nearly 49 percent of BSE SmallCap stocks have fallen over 10 percent in 2026
• Experts advise caution, as valuations in mid- and small-caps remain stretched

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The number of stocks falling more than 10 percent in the correction that began at the start of 2026 has been significantly higher in the mid-cap and small-cap segments compared with the Nifty 50 index, indicating that large-cap stocks have remained relatively resilient despite heightened market volatility.

In the Nifty 50 index, only four stocks have declined by more than 10 percent during this period. Overall, 32 stocks in the benchmark index have delivered negative returns since the beginning of 2026, with the remaining 28 stocks correcting between 1-10 percent.

The four worst performers in the index are ITC, which has fallen nearly 20 percent, Reliance Industries Ltd down about 11 percent, Trent lower by 10.4 percent, and Jio Financial Services, which has declined around 10 percent.

Meanwhile, 18 stocks in the benchmark index have managed to remain in positive territory despite the ongoing sell-off. Two stocks — State Bank of India and Tech Mahindra — have gained more than 5 percent, while the remaining 14 stocks have posted gains in the range of 1 to 5 percent.

The correction has been considerably deeper in the mid-cap segment. In the BSE MidCap index, 119 of the 143 constituent stocks have delivered negative returns so far in 2026. Of these, 34 stocks have corrected by more than 10 percent, while 85 stocks have declined between 1-10 percent. Only 24 stocks have recorded gains, with three stocks rising more than 10 percent and 21 stocks advancing between 1-5 percent.

The impact has been most pronounced in the small-cap space. Out of the 1,213 stocks in the BSE SmallCap index, 1,108 stocks have posted negative returns since the beginning of the year. Nearly 599 stocks, or over 49 percent of the total constituents, have fallen more than 10 percent, while 509 stocks have declined between 1-10 percent. Only 105 stocks have remained in positive territory, recording gains ranging from 1-33 percent.

Experts said that when quality stocks become available at better valuations, investors tend to exit small-cap and mid-cap stocks and shift funds toward larger companies. These segments had earlier commanded premium valuations due to strong earnings growth, prompting investors to book profits and move into relatively safer and more liquid stocks. This rotation has created significant pressure on prices across both categories.

Experts further said investors who have been running SIPs in mid-cap and small-cap funds over the past three years have seen little or no capital appreciation, increasing the likelihood of further redemptions as market corrections deepen.

Gold has been performing well, select pockets of real estate have delivered returns, and foreign direct investment over the past three years has outperformed equity markets. In such an environment, investors are reassessing their asset allocation and redirecting liquidity toward areas where returns are more visible.

Analysts said that even after the recent correction, valuations in mid-cap and small-cap stocks remain stretched. While stock-specific opportunities may exist, they cautioned that identifying quality stocks in a falling market carries higher risk, adding that allowing market volatility to subside before attempting fresh investment may be prudent, as selecting winning stocks during a broad market decline requires significantly higher precision.