Midcap and smallcap indices have outrun their large-cap peers in the recent market pullback, shows data even as markets grappled with the recent geopolitical tensions between India and Pakistan.
From a level of 21,744 hit on April 7, 2025 on tariff fears, the Nifty 50 index has gained around 9 per cent to 24,260 levels by April 28. The Nifty Midcap 100 and the Nifty Smallcap 100 indices, however, gained over 10 per cent each during this period, ACE Equity data shows.
The overall market pullback, according to analysts, has been on account of delay in implementation of higher tariffs by US president Donald Trump. The markets, for now, have also taken geopolitical tensions between India and Pakistan following the killing of civilians in Pahalgam recently in their stride.
The mid-and smallcap segments started to outperform once there was some clarity on the tariffs, said Ambareesh Baliga, an independent market expert. Typically in any market pullback, he said, the mid-and small-cap segments always do better as they are the favourite segments of the retail investors.
“I don’t see the overall markets continuing to move up much in the short-to-medium term due to the geopolitical situation between India and Pakistan. Tough Trump tariff fears have now gone into the background, the markets have not yet fully discounted the worst of the geopolitical concerns. As things stand, investors should sell the rallies, but should not empty out their portfolios. It is better to stay in cash for now,” Baliga advises.
Movers and shakers
Among individual stocks that comprise the mid-and smallcap segments on the NSE, Dixon Technologies, Waaree Energies, Data Patterns (India), Godfrey Phillips India, Devyani International, AU Small Finance Bank and KFin Technologies are some of the counters that have gained over 20 per cent during the above-mentioned period, ACE Equity data shows.
HDFC AMC, IDFC First Bank, Indiamart Intermesh, MRF, Coforge, L&T Finance, CDSL, Oil India, PVR Inox are some of the other prominent stocks that rallied between 15 per cent to 20 per cent, shows data.
Indian stock markets, according to G Chokkalimgam, founder and head of research at Equinomics Research, would continue to recover in the short-term and suggest investors focus on domestic demand-driven stocks to minimize risk.
“Highly conservative investors might keep 50 per cent allocation to large cap (top 100) stocks as DIIs would continue to focus on the large cap segment in any possible event of market stress. Those who have an appetite for risk can consider 60 per cent to 70 per cent allocation to quality small-and mid-cap stocks with focus largely on domestic demand for possible wealth creation,” he said.
Tech view
On the technical front, the Nifty, said Sameet Chavan, head of research (technical and derivative) at Angel One, has confirmed a strong bullish breakout on the charts as it surpassed the February-March swing highs.
If geopolitical tensions escalate or the 23,900 – 23,800 support for the Nifty is breached, he expects a deeper correction towards the 23,500–23,300 levels.
“On the upside, while the broader trend remains bullish, Nifty has an immediate resistance at 24,250–24,350 levels. A move above this zone would confirm a continuation of the primary uptrend. Traders should stay cautious and monitor these key levels, as the next leg of the move may not be as smooth as the recent rally. A selective approach toward midcap stocks is advisable,” Chavan said.
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