Smallcaps set for worst Samvat in 6 years; Nifty posts single-digit return

BSE Midcap index managed to stay afloat with a gain of 1 per cent return thus far in Samvat 2081, after recording hefty 41 per cent and 31 per cent return, respectively in the past two Samvat years

It has been a forgettable Samvat 2081 for small-cap stocks as the BSE Small-cap index posted negative return for the first time in six years. The index has slipped 3.1 per cent thus far in the current Samvat 2081 - the Hindu calendar year. In comparison, the Nifty 50 and BSE Sensex have posted single digit gains of 6.3 per cent and 5.8 per cent, respectively during this period.

 

Earlier, in Samvat 2074 and 2075, the BSE Smallcap index had slipped 15.5 per cent and 8.8 per cent, respectively.

 

The BSE Midcap index, however, managed to stay afloat with a gain of 1 per cent return thus far in Samvat 2081, after recording hefty 41 per cent and 31 per cent return, respectively in the past two Samvat years. 

 

“Investor's focus was mostly on large-and mid-caps this Samvat in the backdrop of global developments and tepid earnings growth back home. For small-caps, September 2025 quarter (Q2-FY26) earnings will be crucial in reviving sentiment. That said, stock and sector-specific moves will continue if the earnings remain robust,” said Gaurang Shah, head investment strategist at Geojit Financial Services. 

Meanwhile, institutional investors, mainly domestic institutional investors (DIIs) have infused Rs 4.7 trillion in equities during Samvat 2081. 

 

Foreign portfolio investors (FPIs), on the other hand, made net outflows of Rs 1.53 trillion in Indian equities during the Samvat, data shows. DIIs includes domestic mutual funds, insurance companies, banks, financial institutions, pension funds etc.

 

FII ownership in Indian equities, according to analysts at Elara Capital, remains below historical norms, with Nifty 50 holdings down from around 28 per cent in December 2020 to around 25 per cent in June 2025, and Nifty 500 holdings dropping from close to 23 per cent to nearly 20 per cent over the same period.

 

“Mid-caps offer the best risk-reward dynamics to play the next beta-driven rally, while large-caps provide stability and small-caps require a selective, bottom-up approach,” wrote Bino Pathiparampil and Saharsh Kumar of Elara Capital in a recent strategy note.

 

On a run

 

Among sectors, automobiles, metals and public sector undertaking (PSU) banks have outperformed the market for the fourth straight Samvat.

 

During Samvat 2081, Nifty Auto index rallied 16 per cent, and Nifty PSU Bank index surged 14 per cent, while Nifty Metal index soared 10 per cent. However, Nifty IT, Nifty FMCG and Nifty Energy index have declined in the range of 8 per cent to 12 per cent, data shows.

 

192 stocks that comprise the BSE 500 managed to outperform the index that gained 4 per cent during Samvat 2081.

 

L&T Finance, Laurus Labs, Manappuram Finance, RBL Bank, Fortis Healthcare, Muthoot Finance and One 97 Communications surged between 70 per cent and 90 per cent, data shows.

 

Shah of Geojit expects around 15 per cent return on a conservative basis in Samvat 2082 from the small-cap index provided earnings come through. “Defence, capital goods, engineering, capital market-related stocks, autos, cement sectors are my bullish bets for Samvat 2082,” he said.

 

The key near-term trigger for the markets, according to analysts at ICICI Securities, is the demand growth across consumer categories in the ongoing festive season post the GST (goods and services tax) rate cut and a potential US-India trade deal.

 

Corporate earnings, they said in a recent note, are expected to grow at 12 per cent compound annual growth rate (CAGR) over FY25-27E. "This should ensure healthy equity returns going forward. Our one-year forward Nifty target is 27,000 (22x PE on FY27E)," ICICI Securities said.