Domestic markets ended the week with a sell-on-rally sentiment due to factors like tapering, earnings slowdown, elevated valuations, and trade uncertainties. Key events like the FOMC meet and Union Budget will likely influence market sentiment, with analysts advising a patient, long-term investment approach.

81 smallcaps fall in double-digits as markets follow sell-on-news trend. Is there reprieve in Budget week?

Nifty’s Midcap 150 index fell 1.7% on Friday, the Smallcap 250 index dropped 2.15% and the Nifty 50 fell 0.5% at close. The declines took the total losses in both midcap and smallcap indices so far in 2025 to 6.8% and 9.9%, respectively. The Nifty 50 is down 2.3% in the period.

Mid, smallcaps extend losing run for 3rd week, more downside seen

Indian equity indices gave up opening gains to inch lower on Friday, as worries over moderation in corporate earnings overpowered optimism about lower U.S. interest rates and oil prices. Meanwhile, six mid and smallcap stocks from the Nifty 500 index hit 52-week lows. Here’s the list: Trading Trends

Cyient, Tata Technologies among 6 stocks that hit 52-week lows on Friday - Trading Trends

PMS Funds: Top PMS funds delivered stellar returns in CY2024, with Stallion Asset’s Core Fund leading at 69.7%. Thematic strategies in IT, healthcare, and smallcaps outperformed, while benchmark indices like Nifty 50 gained a modest 8%.

PMS Tracker: Top 10 funds delivered over 48% returns in CY24

Mahesh Patil, CIO of Aditya Birla Sun Life AMC, believes that recent market corrections have made large-cap stocks more attractive, potentially bringing back foreign investors. Despite strong domestic investments, the weakening market breadth may cause a slight correction in the Nifty and ongoing declines in midcap and smallcap stocks. This year will be more stock-specific rather than sector-based betting.

Valuations still frothy in EMS, industrials; IT & pharma good for rupee depreciation and export play: Mahesh Patil

​Now as far as the cyclical factors are concerned, which today are visible in some of the segments, maybe due to food inflation, maybe due to the commodity inflation, so that will go away, maybe you can say 3Q was the worst, 4Q might show a little bit better numbers than 3Q.

Mid and smallcap stocks show signs of excessive valuations; fundamentals key to long-term recovery: Amnish Aggarwal

Retail investors have increased their stakes in certain smallcap stocks during the December quarter despite market corrections. Notable performers include Kitex Garments, V2 Retail, and Indraprastha Medical, which have doubled investor wealth in six months. However, experts advise caution given the inherent risks in smallcap investments.

Retail investors doubled down on these 10 smallcaps even in downturn. Are they worth buying?

Seventeen smallcap stocks have turned multibaggers since Modi 3.0’s first budget, delivering over 100% returns despite a market downturn. Companies like Marsons, Pacheli Industrial Finance, and Kitex Garments lead the gains, with notable rallies of over 200%. Investors are advised to moderate return expectations while adopting a “buy on dips” strategy.

Budget 2025: 17 stocks turn multibagger since last budget and all are smallcaps. Do you own any?

On Monday, benchmark Sensex gained about 454 points, closing at 77,073. During this rally, seven stocks from the BSE Smallcap Index hit their 52-week highs, reaching their highest prices in the past year. A 52-week high is a crucial indicator for traders and investors, reflecting a stock’s peak value over the last 12 months. It serves as an important metric for assessing a stock’s current market position and forecasting its future growth potential. Smallcap Peaks

These 7 smallcap stocks hit fresh 52-week highs, rallied up to 55% in a month - Smallcap Peaks

Monitoring the activities of large institutional investors, like foreign institutional investors (FIIs), can be highly beneficial due to their extensive research. An ETMarkets study revealed that FIIs steadily increased their investments in 173 smallcap stocks during the first three quarters of FY25 (June to December 2024). Out of these, 16 smallcap stocks turned into multibaggers, with the top 6 showing a remarkable surge of over 150%. This trend highlights the potential for investors to gain valuable insights by tracking FII investments in small-cap stocks. (Data Source: ACE Equity). Market Movers

Top 6 FII-favoured smallcap stocks surge over 150% in FY25 - Market Movers

ETMarkets’ analysis of BSE smallcap stocks reveals that, in the past three sessions (January 15-17), four stocks have consistently increased in price, trading volume, and delivery volume, indicating higher investor interest in these stocks. (Data Source: ACE Equity) Smart Surge

4 smallcap stocks saw price and volume surge in last 3 days - Smart Surge

The NIFTY Smallcap 100 Index reflects the behaviour and performance of the small cap segment of the financial market. The rescheduling of index constituents happens bi-annually every year.

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