The shares of several smallcap and midcap companies recorded notable gains on June 30, pushing the broader market indices into the green for the seventh consecutive session. This comes despite benchmarks luring the red in the morning.
The Nifty Smallcap index gained over 111 points (0.59 percent) to hover around 19,088 in the morning. The Nifty Midcap index rose nearly 137 points (0.23 percent) to stand at 59,522, as seen at around 10 am.
Notably, the broader market indices have recorded significant gains during their respective gaining streaks. The market capitalization of the BSE Midcap index and BSE Smallcap index have increased by Rs 2.45 lakh crore and Rs 3.41 lakh crore respectively in just seven sessions so far.
Benchmark indices Sensex and Nifty meanwhile dropped over 225 points (0.36 percent) and 64 points (0.25 percent) to hover around 83,832 and 25,570 respectively.
Bhavik Joshi, Business Head at INVasset, said Indian smallcap and midcap equities have shown remarkable resilience, posting a seven-session winning streak. He however noted that this recent strength comes after a sharp corrective phase earlier between December and March when the Nifty Midcap 100 and Smallcap 100 corrected by 22 percent and 28 percent respectively. "That phase, however, helped reset expectations, bringing broader market valuations back to reasonable territory," he noted.
Top midcap gainers:
Bank of Maharashtra was the top gainer on the midcap index, jumping around 5 percent to trade at Rs 56.86 apiece. Waaree Energies shares followed, rising nearly 4 percent to trade at Rs 3,05 apiece. Union Bank of India and Bandhan Bank shares gained around 3 percent each, while Indian Bank, Aurobindo Pharma, Bank of India and Federal Bank shares gained over 2 percent each.
Bharat Dynamics (BDL), Motilal Oswal Financial Services, Muthoot Finance and Glenmark Pharma shares rose over 1.6 percent each, while Yes Bank, Premier Energies, L&T Finance, IREDA, CONCOR, HUDCO, Colgate Palmolive and others rose over 1 percent each.
Top smallcap gainers:
On the smallcap index, Karur Vysya Bank shares jumped nearly 4 percent to emerge as the top gainer. Hindustan Copper, Natco Pharma and IDBI Bank shares followed, rising nearly 3 percent each. Zen Technologies, Kaynes Tech and Laurus Labs shares surged over 2 percent each, while Data Patterns and Castrol shares rose over 1.6 percent each.
Other notable smallcap others which recorded significant gains include Titagarh Rail Systems, Angel One, Aadhaar Housing Finance, ITI, MCX and Reliance Power.
What's driving the rally in broader markets?
Bhavik Joshi said that the current rebound in broader markets is increasingly being driven by improving fundamentals. "India's economy continues to deliver optimistic data—rising GST collections, double-digit credit growth, and sustained capex by both government and private players. Mid- and small-cap companies, often more exposed to domestic consumption, infra, and industrial activity, are emerging as early beneficiaries," he said.
"Another critical factor aiding the outperformance is India’s relative insulation from major geopolitical flashpoints, whether it’s the West Asia conflict or US–China tensions. Additionally, as FII inflows diversify beyond large caps and DII flows stay steady, broader market participation is deepening. Earnings from key sectors—like capital goods, financials, and manufacturing—have surprised positively, reinforcing investor confidence," he added.
Joshi noted that the rally in small and midcaps is not just technical. "It reflects a recalibrated, fundamentally-supported uptrend in segments that are structurally aligned with India's domestic growth story. The tone remains neutral-to-bullish as long as macro stability persists," he said.
Ajit Mishra, SVP of Research at Religare Broking, said, "The recent buoyancy in the broader indices is primarily fueled by strong domestic inflows, record-high SIP (Systematic Investment Plan) contributions, and a moderation in geopolitical tensions. Investor sentiment continues to remain upbeat, underpinned by encouraging macroeconomic indicators and a positive outlook for economic growth. As optimism builds, investors are increasingly turning to mid- and small-cap stocks, which generally offer higher growth potential. These segments tend to outperform during phases of market optimism and are key beneficiaries of liquidity-driven rallies in the broader market."
The broader markets have seen significant volatility in recent months. While the sharp rises in stock prices have significantly increased investor interest in the segment, analysts have highlighted the elevated valuations.
"Smallcaps offer more options but come with elevated risks and volatility," said Rahul Singh, CIO, Equities, Tata Mutual Fund, while speaking at Moneycontrol Mutual Fund Summit earlier this month.
Also read: Our LIVE blog on stock market updates
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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