Street Signs: Smallcaps miss the lift, Nifty faces its Rubicon test, more

Smallcaps miss the lift as midcaps break clouds

  The benchmark Sensex and Nifty are now less than 1 per cent below their all-time highs, while the Nifty Midcap 100 recently reached a record peak. By contrast, the Nifty Smallcap 100 remains about 9.2 per cent below its previous high. Analysts credit this underperformance to retail and high networth investors shifting attention towards initial public offerings (IPOs) and lingering valuation concerns in smallcaps. “Earnings growth has been weak over the past five quarters, and smallcap earnings have lagged behind both the index and midcap stocks. From March 2021 through September 2024, multiple expansions were most pronounced in smallcaps, yet that is where earnings have slowed the most. This explains why smallcaps are struggling to recover compared with largecaps,” observed an analyst.

 

IPO traffic light: Red now, green in Dec

 

This week marks the first pause in initial public offering (IPO) activity after several weeks of robust momentum. Only Sudeep Pharma and Excelsoft Technologies are expected to list, while Meesho may announce its IPO plans. December, however, promises a flurry of activity, with at least a dozen companies expected to launch their issues. Historically, December has been a slow month due to limited access for foreign portfolio investors; however, growing domestic participation has shifted this pattern in the post-pandemic years. Over the past three of four years, December has seen more than 10 IPOs.

 

26,100-26,150: Nifty faces its Rubicon test

 

Last week, the Sensex and Nifty rose 0.8 per cent and 0.6 per cent, respectively, supported by a pullback in artificial intelligence (AI) stocks, encouraging second-quarter (July–September 2025-26) results, and hopes of a US trade deal. Gains were tempered after stronger-than-expected results from Nvidia eased concerns over AI demand, prompting profit-booking. Analysts caution that the rally is concentrated in a few stocks rather than broad-based. “Only five stocks have driven this rally, making it a weak week for the wider market. I see 25,750–25,800 as key support. Over the past four weeks, Nifty has attempted to cross 26,100 at least 10–11 times; now, 26,100–26,150 will serve as critical resistance. We need at least one or two closes above this range to confirm a sustained uptrend,” said an analyst.