Midcap, Smallcap underperform; Natco, Kaynes, Epack, CarTrade down 4%

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Midcap, Smallcap index performances today

 

The BSE MidCap and the BSE SmallCap index were trading weak even as the benchmark BSE Sensex hit a new high in Thursday's intraday trade.

 

The BSE Sensex hit a new of 86,055.86 in the intraday deal today after a gap of 14 months. The index crossed its previous high of 85,978.25, touched on September 27, 2024.

 

"The market rally was supported by a mix of domestic and global cues. Renewed optimism over a potential rate cut by the US Federal Reserve in December, along with expectations of a 25-basis-point repo rate cut by the Reserve Bank of India early next month, improved investor sentiment. Additionally, easing crude oil prices - driven by hopes of progress toward peace between Ukraine and Russia-provided further support," said Ajit Mishra – SVP, Research, Religare Broking.

 

At 12:26 PM, the BSE Sensex was up 0.21 per cent as compared to 0.22 per cent decline in the BSE Midcap index and 0.29 per cent fall in the BSE Smallcap index. The midcap index is trading 4.7 per cent lower against its all-time high level of 49,701.15 touched on September 24, 2024, while the smallcap index is 9.2 per cent away from its record high level of 57,827.69 hit on December 12, 2024.

 

Motilal Oswal Financial Services, Kaynes Technology India, Indian Bank, JK Cement, and Bayer CropScience from the midcap segment, and Natco Pharma, Apex Frozen Foods, CarTrade Tech, Indigo Paints, Man Industries, Radico Khaitan, and EPACK Durable from the smallcap index were down in the range of 2 per cent to 5 per cent on the BSE in the intraday trade.  ALSO READ | Nifty Auto at new high; here's why Tata Motors, Ashok Leyland rose 5% today 

Outlook on midcap and smallcap stocks

 

According to analysts at Kotak Institutional Equities, the earnings outlook seems to have become better on aggregate over the past two months, especially for large- and mid-cap stocks, with earnings being broadly stable. However, the sectoral analysis of change in consensus earnings estimates suggests that the earnings stabilisation is led by modest upgrades in some of the larger sectors such as oil, gas & consumable fuels, banks, metals & mining, and IT services. 

 

Nonetheless, the brokerage firm notes that the Street is expecting strong earnings growth in a large number of sectors in H2FY26.

 

Meanwhile, Elara Securities' cap-tier preference has been mid-caps, followed by large-caps, and then small-caps. If Q3 earnings for small-caps sustain the momentum seen in Q2, along with earnings upgrades for small-caps materialises, the brokerage firm said it will reassess this pecking order from a top-down perspective.

 

"Corporate earnings for Q2FY26 came in healthy with small and mid-caps lifting the earnings trajectory for the listed universe amid muted show by the large-cap space. For the listed universe, this marks resumption of double-digit earnings growth trend (12 per cent Y-o-Y) after a hiatus of five quarters," analysts at ICICI Securities said.

 

Mid and small-caps posted robust earnings at 25 per cent and 18 per cent, respectively, in Q2FY26. This is encouraging amidst fluid global macro-economics and monsoon led disruptions domestically. With improving growth outlook, the brokerage firm remains positive on markets. 

 

With rest of asset classes i.e. global equities, debt, precious metals delivering healthy returns in the past, stage is all set for domestic equities to outperform peers, it said.