Midcaps and Smallcaps See Worst Losses in 20 Months Amid Market Turmoil

Midcap and smallcap stocks experienced their steepest weekly decline since February 2025, marking their worst losses in 20 months. The Nifty Midcap 100 index fell 5.6 percent, while the Nifty Smallcap 100 index dropped 7.3 percent. This tumultuous week also saw broader benchmarks, the Nifty 50 and Sensex, end lower after two straight weeks of gains, declining 0.39 percent (87.65 points to 22,600) and 0.17 percent (125.56 points to 73,123.83) respectively. Over the week, Nifty 50 and Sensex fell 2.4 percent and 2 percent.

The market value of listed companies decreased by approximately ₹7 trillion on Friday and ₹20.6 trillion over the week. Midcaps and smallcaps—companies ranked 101 to 500 by size—accounted for ₹8.9 trillion of this total. Somil Mehta, head of retail research at Mirae Asset Sharekhan, noted that the primary pressure on domestic markets stems from rising crude oil prices and global geopolitical tensions, rather than internal fundamentals. Brent crude oil December futures jumped to $115 a barrel on Friday evening, up from $109.9 a barrel a week prior, with Mehta projecting a potential rise to $118 a barrel.

The impact was widespread, affecting brokers and wealth managers, with Motilal Oswal Financial Services and KFin Technologies each down 5.2 percent, 360 ONE WAM down 4.8 percent, and Angel One down 4.2 percent. Valuations help explain the sharper sell-off in smaller stocks; even after this week's fall, the Nifty Midcap 150 trades at 27 times profits and the Nifty Smallcap 250 at 34 times, compared to the Nifty 50's 19.40 times. For ordinary investors, only 317 NSE stocks rose on Friday, while 2,368 fell, and half of all listed stocks lost over 2.6 percent, indicating widespread damage.

Dharmesh Shah, head of technical research at ICICI Securities, stated the Nifty is firmly in a corrective phase, with strong support between 22,100-21,700, and warned that selling pressure in midcap and smallcap indices is likely to persist despite oversold conditions. The Nifty India VIX, or volatility index, spiked 6.32 percent to 16.76 percent on Friday, reflecting market caution and rising nearly 14 percent in five sessions. Mehta added that midcap and smallcap indices have breached key support levels, suggesting a bearish near-term outlook, with any further rupee depreciation against the US dollar potentially adding pressure. Shah indicated that while the Nifty 50 may be nearing a bottom, a clear reversal requires a close above 23,500, as it faces selling pressure in the 23,000-23,100 zones.

What to watch: Brent crude prices, global geopolitical tensions, and Nifty 50's ability to close above 23,500 for a trend reversal.

Editor's note: The draft is highly comprehensive, covering all key data points, expert quotes, and market context provided in the source text accurately.