Small and midcaps rebound to pre-West Asia war levels, shows data

Small and midcap indices rebound sharply to pre-war levels, outperforming benchmarks on attractive valuations and stronger recovery from earlier selloff

Small and midcap stocks staged a sharper recovery from recent lows, with indices tracking these segments back at pre-war levels. 

  The Nifty Smallcap 100 index ended on Tuesday at 17,309, up nearly 15 per cent from its recent low of 15,099 on February 23. Similarly, the Nifty Midcap 100 has gained about 12 per cent. Both indices have returned to levels seen before the US-Iran conflict, which rattled investor sentiment and triggered a sharp selloff.  While the benchmark Nifty 50 has  recovered strongly, it still trades about 4 per cent below its pre-war levels. Experts attribute the faster rebound in theto relatively attractive valuations and sharper corrections earlier.  “Small and midcaps have outperformed the benchmarks because, in relative terms, their valuations were very attractive. In the current year, smallcaps are likely to outperform the Sensex and Nifty. Even after the recent recovery, many stocks remain attractively valued. While some stocks may have returned to pre-war levels, they are still far from 2024 highs. Investors with a moderate risk appetite should allocate at least 50 per cent of their portfolio to quality small and midcap stocks that have attractive valuations and clean balance sheets,” said Chokkalingam G, founder, Equinomics.