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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.
India’s broader markets have come under sustained selling pressure, with mid-cap, small-cap and SME stocks witnessing their steepest monthly decline in nearly a year
According to Elara Capital, midcap companies are expected to report 16 percent year on year growth in profit after tax for the December quarter, while smallcap firms are projected to deliver a much stronger 30 percent year on year rise in profits.
Large caps are regaining momentum, with DSP Mutual Fund noting that conditions now clearly favour a shift back toward the market’s biggest stocks.
The BSE MidCap index is currently trading at 25.23 times its one-year forward earnings, well above its 10-year average valuation of 23.29 times. The BSE SmallCap index is also trading at elevated levels, at 22.6 times one-year forward PE compared with its long-term average of 18.97 times.
India’s mid- and small-caps lose steam even as Sensex, Nifty hover near record highs. What stretched valuations, IPO liquidity and earnings mean for investors.
Even as the Sensex and Nifty notch mild gains, the sharp fall in the breadth indicator underscores mounting weakness across midcaps and smallcaps.
As per data from primeinfobase.com, the share of stake held by retail investors in companies listed on NSE went up to 7.53 percent as on June 30 from 7.51 percent as on March 31. In value terms, retail holding stood at Rs 34.25 lakh crore as on June 30.
The Nifty Midcap 150, Nifty Smallcap and Nifty 500 indices are on track to rise for a fourth consecutive month. Many experts believe that without an earnings pickup, elevated broader market valuations may constrain returns.
Retail shareholders pared their exposure to smallcaps and midcaps during the three months ended March amid the market downturn.
Experts say that India-centric companies have led this move, as they’re shielded from global disruptions.
79 listed PSU companies have disclosed their shareholding data so far for Q4, with foreign institutional investors (FIIs) increasing their stakes in 52 percent of the companies.
Market experts have been suggesting that investors rush to the safety of fairly valued large-caps given the ongoing tariff turbulence.
The one-year forward price-to-earnings (P/E) ratios for the BSE Midcap and Smallcap indices stands at 24.3x and 20.4x, respectively - down from recent peaks of 32x and 27x, and slightly below 10-year averages of 27.94x and 21.44x
Currently, 100 stocks in the BSE SmallCap and 15 in the BSE MidCap index are delivering single-digit returns over both one-year and three-year periods even as several stocks have breached key technical support levels.
The broader markets snapped their multi-day losing streak as investors went bottom-fishing, leading to the Nifty Smallcap index gaining over 1 percent intraday.
The ongoing sell-off in the broader markets continued as smallcap and midcap stocks saw exacerbated selling pressure.
According to Moneycontrol data, an aggregate of 683 firms in the BSE SmallCap Index reported a 7.1 percent increase in revenue for Q3, marking the seventh consecutive quarter of single-digit growth and the 13th straight quarter of sequential single-digit growth.
For 2025 so far, the Nifty Smallcap 100 index has tanked 17.58 percent, while the midcap index has cracked 11.82 percent.
Kotak Institutional Equities warns that small-cap and mid-cap stocks are likely to be hit the hardest in the ongoing market correction.
From its lifetime highs, the Nifty Smallcap 100 index has tanked 22 percent, while the Nifty Midcap 100 has fallen 18.9 percent.
Year-to-date, in rupee terms, the BSE MidCap and SmallCap indices have lost around 11 percent and 13 percent, respectively. From their September 2024 peak, both indices have fallen over 20 percent, entering bear market territory.
In 2024, the benchmarks Sensex and Nifty recorded gains of over 8 percent each, while the BSE Midcap and BSE SmallCap indices surged by 26 percent and 29 percent, respectively.
Analysts suggest that the ongoing rally could persist temporarily, but January’s earnings season may bring renewed disappointment
Despite today’s rally, small- and mid-cap indices have struggled more than the frontline stock since late September, with the respective indices falling 12% and 11%, respectively, compared to the Sensex and Nifty's slightly smaller declines.
