'Except for extremely conservative investors, others can consider allocating 10 to 20 per cent of their portfolio to small caps.'
Despite geopolitical tensions and FII outflows, Indian small and midcap stocks have not only recovered losses but are also outperforming largecap indices, driven by attractive valuations, domestic institutional support, and a rebound in earnings.
After two years of strong gains, smallcap stocks fell sharply in 2025, but the correction may be setting up opportunities for long-term investors.
The BSE Smallcap index hit an over eight-month low of 47,627.96, falling 3 per cent in Tuesday's intraday trade amid selling pressure due to ongoing tariff-related concerns and rising geopolitical tensions.
Unless the primary market momentum slows, smallcap stocks will stay subdued.
Companies in the lower mcap deciles have recorded the fastest growth in median mcap.
Over 50 per cent, or 660 stocks, from the BSE 1000 index recorded negative returns during CY25.
Investors seeking higher returns at relatively higher risk should consider allocation to smallcap equity funds.
Small- and midcap stocks have delivered their biggest monthly rally in 12 years, but rising oil prices and global tensions could make the road ahead volatile.
Domestic Institutional Investors (DIIs) have significantly increased their holdings in Nifty 500 companies, reaching a record 20.9 per cent by the end of March, while Foreign Portfolio Investors (FPIs) reduced their ownership to an all-time low of 17.1 per cent, according to Motilal Oswal Financial Services.
This marks a rebound after more than two years of underperformance during a strong rally in smallcap stocks.
Indian investors have seen their wealth erode by a staggering Rs 16.77 lakh crore over four trading sessions, as the markets faced deep losses driven by elevated crude oil prices, geopolitical tensions, persistent foreign fund outflows, and a record-low rupee.
'... with the rest split between mid and smallcaps, as valuations are becoming more attractive across segments.'
Is the current rally telegraphing a durable peace plan in West Asia, boosted by United States (US) President Donald Trump's incoherent and contradictory posts on social media?
'As re-industrialisation gathers pace across regions like Asia, Europe and the US, a wide range of products and inputs will see demand.'
'Defence, capital goods, engineering, capital market-related stocks, autos, and cement sectors are my bullish bets for Samvat 2082.'
Indian benchmark indices Sensex and Nifty experienced declines due to a sharp rally in crude oil prices, continuous foreign fund outflows, and geopolitical uncertainties. Regulatory developments in the banking sector, particularly the implementation of the Expected Credit Loss (ECL) framework, also contributed to the selling pressure.
Net inflows into equity mutual fund schemes moderated in FY26, falling by 27 per cent to about 3 trillion till February, as choppy markets and global uncertainties prompted investors to shift towards safer options like hybrid funds and gold ETFs.
Indian benchmark stock indices, Sensex and Nifty, closed nearly 1 per cent lower following the collapse of US-Iran negotiations, which heightened concerns of a prolonged conflict in West Asia and drove crude oil prices sharply higher.
New demat account additions in India reached an 11-month low in March, with only 2.15 million new accounts opened, significantly below the 12-month average. This slowdown is attributed to a sharp decline in equity markets, escalating West Asia tensions, and increased crude oil prices impacting India's economic outlook.
'In investing, poor sentiment is always a good vintage to build a portfolio.'
Fixed deposits from nationalised banks delivered higher returns than equities, outperforming both inflation and stock market benchmarks.
Indian markets on Dalal Street rallied sharply as easing tensions in the US-Iran conflict and stable oil prices boosted sentiment. Track Nifty 50 and BSE Sensex performance and key global triggers.
Indian investors have seen their wealth erode by a staggering Rs 48.29 lakh crore since the West Asia war began on February 28, leading to a significant downturn in the BSE Sensex and NSE Nifty, driven by geopolitical tensions and rising crude oil prices.
'The next phase of India's IPO cycle will be defined by quality, pricing discipline and investor selectivity.'
Indian stock market indices Sensex and Nifty closed nearly 1 per cent higher, marking their third consecutive day of gains, supported by a slight decrease in crude oil prices and positive global market trends.
The BSE Sensex and the Nifty 50 declined around 4.5 per cent each since the start of the West Asia conflict.
Trade deals ease risks for Indian equities, but weak demand and stretched valuations raise questions over whether optimism -- especially in smallcaps -- can turn into a sustained bull run, points out Debashis Basu.
Flexicap fund performance depends heavily on the fund manager's decisions.
Indian equity investors experienced a significant loss of 16.32 lakh crore due to a two-day stock market decline fueled by escalating geopolitical tensions involving the US, Israel, and Iran.
'Retail portfolios were going nowhere even as headline indices moved higher, prompting investors to sell holdings and shift money to IPOs, attracted by listing-day gains.'
Ask rediffGURU Reetika Sharma your insurance, mutual fund and personal finance-related questions.
Indian equities on Dalal Street saw volatility as global market trends and fresh tariff concerns linked to Donald Trump impacted investor sentiment. Track Sensex, Nifty50 movement and key market drivers for Feb 24, 2026.
Equity benchmark indices Sensex and Nifty experienced a significant decline, primarily driven by a selloff in IT stocks due to concerns about AI disruption and renewed worries over global trade.
'The problem is not just slower growth, but also the quality of growth.'
The BSE Sensex plummeted 1,236 points, wiping out nearly Rs 7 lakh crore in investor wealth, driven by escalating tensions between the US and Iran and subsequent market selloff.
Benchmark stock indices Sensex and Nifty closed on a flat note in a choppy session on Wednesday as gains in PSU banks and auto shares were offset by losses in IT stocks.
Stock markets closed higher for the second straight session on Tuesday, driven by gains in bank, IT and capital goods shares.
Benchmark BSE Sensex fell 558 points on Thursday amid heavy selling in IT shares, as concerns over AI-led disruptions and waning hopes of a Fed rate cut after firm US economic data weighed on investor sentiment.
Retail investors' equity portfolios have significantly underperformed benchmark indices over the past 16 to 18 months.
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