The Nifty Smallcap 250 index jumped 17.1% in April – the highest monthly gain since its inception in April 2016. The Nifty gained 7.5% in April – its strongest monthly performance since December 2023 – and the Midcap 150 index advanced 13.2% in April – its best month since November 2020.
l Local investors buy stocks hurt in March sell-off l FPI selling in large caps also a factor l Even as tech indicators point to further gains, market players divided on prospects
The Smallcap 250 index fell 10% in March – the worst performance since February 2025.
“The small-cap rally in April came after a very sharp correction since 2025, when nearly 66% of small-cap stocks had fallen. That correction brought back investor interest into quality small-cap businesses where growth prospects remained strong despite price fall,” said Feroze Azeez, joint CEO, Anand Rathi Wealth.
Azeez also said continued foreign selling in large caps pushed more domestic money towards smaller companies.
Live Events
HFCL, Ola Electric Mobility, Cohance Lifesciences, Cemindia Projects, Gallantt Ispat and Welspun Corp soared between 56% and 71% in April, emerging as the biggest contributors to the index’s gains.
The Smallcap 250 space appeared undervalued until a month ago, which led to a phase of bargain buying, according to Vikas Gupta, CEO at OmniScience Capital.”We expect the index to gain 5-8% immediately after forming a bottom around its weekly 200 EMA (Exponential Moving Average),” said Ruchit Jain, vice president, Motilal Oswal Financial Services.
While the momentum is in favour of small-caps, market participants remain divided about their prospects
Azeez of Anand Rathi said the trend can sustain over the rest of the year because valuations still appear reasonable, with the index trading nearly 17.4% below estimated fair value.
“At current levels, the index seems to have moved beyond its fair value and could see a correction of up to 30% from these levels,” said Gupta of OmniScience.