Midcap, Smallcap Stocks Post Significant Gains, Up to 112% YTD Amid Global Tensions

Small and Midcap Stocks Outperform Large Caps in 2026

Despite benchmark indices remaining under pressure in 2026, broader markets have significantly outperformed, with the Nifty Smallcap 100 and Nifty Midcap 100 delivering positive returns despite volatility in large caps. The Nifty 50 is down 9.47% year-to-date (YTD) and has declined 7.49% over the last three months.

In contrast, the Nifty Smallcap 100 has gained 1.52% so far in 2026 and risen 5.77% over the past three months. Similarly, the Nifty Midcap 100 is up 1.35% year to date and has advanced 3% over the same three-month period. According to experts, the superior performance of small- and mid-cap stocks can be attributed to robust earnings growth, an optimistic business outlook, and comparatively attractive valuations against large-cap stocks.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Strong momentum in defence, auto components, chemicals, construction materials, jewellery, metals and mining, and structural steel tubes have demonstrated strong earnings momentum. Among the top Nifty Midcap 100 gainers year to date, BSE led the rally with a surge of 58.73%, followed by Solar Industries India, which gained 50.15%. NLC India rose 40.98%, while CG Power and Industrial Solutions and Steel Authority of India (SAIL) advanced 33.60% and 33.50%, respectively.

On the flip side, technology and financial stocks featured among the major laggards. KPIT Technologies declined 35.91% YTD, while IDBI Bank fell 29.26%. Other notable underperformers included SBI Cards and Payment Services, Kalyan Jewellers India, and Apollo Tyres, reflecting pressure in select consumption, financial and export-linked segments.

On the Nifty Smallcap 100 index, HFCL topped the gainers’ list with a massive 112.79% rise year-to-date, followed by Apar Industries, which gained 53.52%. Great Eastern Shipping Company climbed 53.14%, while Data Patterns and Multi Commodity Exchange of India advanced nearly 50% each.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, attributed the outperformance of small- and mid-cap stocks to better-than-expected Q4 earnings and stronger growth trajectories. He noted that small- and mid-cap IT stocks have significantly outperformed their large-cap peers, lending resilience to the segment, with a similar trend visible in metal stocks as well.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

According to Sunny Agrawal, Head of Fundamental Research at SBI Securities, fundamentally, small and midcaps are reporting relatively better earnings growth and are hence outperforming large caps. Many SMID sectors with relatively better earnings are jewellery, structural steel tubes, metals and mining, chemicals, building materials, defence, auto ancillaries, etc. Moreover, valuations are comfortable in the SMID relative to the earnings growth trajectory over the next 2 years.

Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, said the Nifty Smallcap 100 index has rallied strongly from the 15,000 level to around 18,800. Although the index has seen some correction over the past couple of weeks, it has resumed its uptrend after finding support near the 38.2% retracement level and the 200-day simple moving average (200 DSMA). According to Bhosale, the 17,500–17,200 zone is expected to act as a strong support range, while the index could retest the 18,800 mark in the near term as the broader outperformance trend remains intact.

Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said the Nifty Midcap Index has staged a strong pullback after finding support near its 20-day EMA four sessions ago. The index is currently trading just around 1% below its all-time high, reflecting sustained bullish momentum. Shah noted that the RSI is gradually strengthening, while the DI+ crossing above the DI- on the ADX indicator signals growing buyer dominance. He expects the 60,400–60,300 zone to continue acting as immediate support, with the positive trend likely to remain intact as long as the index sustains above this range.