Small, midcap indices down up to 2%, snap six day-rally as gains fizzles amid tariff overhang

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Shares of small and midcap companies were sharply lower on March 25, pushing the broader market indices into the red and snapping their six-day gaining streak, as investors worried over the sustainability of the rebound, the upcoming reciprocal tariffs by US President Trump, while waiting for clearer signs of buying interest from foreign investors.

The Nifty Smallcap index was down nearly 2 percent while Nifty Midcap index dropped over apercent in mid-day trade. The broader market indices were underperforming the benchmark index Nifty 50, however, fell sharply by nearly 200 points from day's high.

"Last week's rebound was driven by bargain hunting, and fuelled by expectations of a turnaround in FPI pushing the Sensex, Nifty, Nifty midcap 100, and Nifty smallcap 100 to their strongest weekly gains in years. However, there are sound doubts over the rally's durability, given that FPI have still remained net sellers of equities," Bajaj Broking said. It added that charts show that markets could form a double bottom formation, wherein they test a low, recover and again revisit the low before stabilizing. This may take three months or longer.

Religare Broking's Ajit Mishra also advised investors to remain cautious and closely monitor key technical levels and global cues despite the overall positive sentiment in the market.

On the midcap index, Dixon Technologies was the top loser, down over 5 percent to snap its 5-day gaining streak. Other notable midcap names that recorded losses included Mangalore Refinery and Petrochemicals (down nearly 5 percent), Policybazaar-parent PB Fintech (down over 4 percent), Kalyan Jewellers (down nearly 4 percent), Bharat Dynamics (down nearly 4 percent), Vodafone Idea (down over 3 percent), HUDCO (down nearly 3 percent), Delhivery (down over 2 percent), Mazgaon Dock Shipbuilders (down over 1 percent) and others.

On the smallcap index, Swan Energy shares were the top loser, falling nearly 6 percent. Other notable smallcap stocks that recorded losses included Ola Electric (down nearly 5 percent), Central Bank (down nearly 5 percent), Castrol India (down over 4 percent), BEML (down nearly 4 percent), MCX (down nearly 4 percent), CAMS (down nearly 4 percent), Kaynes Tech (down nearly 3 percent) and others.

Notably, the sharp downturn in the broader markets comes after a strong surge a week ago, when the mid and smallcap indices gained more than 10 percent and 13 percent from their respective March 3 lows.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before making any investment decisions.