Under pressure: Smallcap stocks see worst monthly decline in nearly 3 years

For the first time in 23 years, Nifty has declined for four consecutive months

Stocks in the smallcap segment experienced their worst monthly rout in nearly three years. The Nifty Smallcap 100 Index concluded January with a decline of 9.9 per cent, marking its most significant setback since May 2022 and the third-worst monthly performance since the COVID-19 pandemic. The midcaps also suffered, with the Nifty Midcap 100 falling 6.1 per cent -- its steepest drop since October 2024.

 

In contrast, largecap indices managed to recover an initial decline of over 3 per cent. The Sensex ended the month with a 0.82 per cent decline, while the Nifty fell 0.6 per cent, registering its fourth consecutive monthly loss. This marks the first time in 23 years that the Nifty has declined for four consecutive months. India Inc’s market cap fell by Rs 17.8 trillion to Rs 424 trillion ($4.9 trillion). During this period, India’s market value dropped out of the $5 trillion global club.

 

Of the 16 sectoral indices compiled by BSE, almost all ended the month in the red, with real estate and pharmaceuticals being the worst-performing sectors. Among the Nifty 50 components, Bajaj Finance and Maruti Suzuki India outperformed the weak market trend, while Trent and Dr. Reddy’s were the worst-performers.

 

Foreign portfolio investors (FPIs) sold shares worth Rs 74,000 crore, marking the second-highest monthly outflow by overseas investors in a calendar month since October 2024, when they withdrew nearly Rs 92,000 crore. Meanwhile, domestic institutional investors (DIIs) injected Rs 86,592 crore into the market, providing some cushion against the downturn.