Why Did Smallcap and Midcap Indices Gained 2% While Nifty 50 Stayed Flat?

On February 19, broader markets showed strong performance. Smallcap and midcap indices gained up to 2%. The Nifty Smallcap 100 index rose over 2%. The Nifty Midcap 100 index increased by 1.2%. In comparison, the Nifty 50 index traded flat with a mild bullish bias at 22,957.05.

Railway, defense, and public sector stocks led the gains. These sectors had faced significant selling pressure earlier. Experts caution against bottom-fishing in small and midcap stocks due to high valuations.

In 2025, the Nifty Smallcap 100 index corrected by 17.58%. The midcap index declined by 11.82%. Analysts warned about stretched valuations, but retail investors ignored these concerns. ICICI Pru AMC’s CIO, S Naren, advised against SIPs in mid and small-cap funds due to market volatility. This also fueled the recent selloff.

Looking ahead, experts expect diverse performance across different market segments. Large-cap indices may remain range-bound. Midcap, small-cap, and narrative stocks might face sharper corrections.

This analysis suggests cautious optimism. Investors should stay informed and carefully consider their investment strategies.