The beginning of the year 2025 has been unprofitable for midcap and smallcap stocks. Both these indices are currently underperforming Nifty 50 in calendar year 2025. If analysts are to be believed, there is no relief in sight for them at the moment. While the Nifty Midcap 150 index is down about 7 per cent so far this year, the Nifty Smallcap 250 index is down about 9 per cent. Data shows that the Nifty-50 index has weakened by about 2 percent during this period.
Strategist VK Vijayakumar said, ‘There are two trends in the market that need attention. First, there is a consistent trend in institutional activity that foreign investors are continuously selling while domestic institutions are continuously buying. Second, there is a trend towards quality – largecaps are strong while the main indices are weakening. Both of these trends are likely to continue in the short term. Since the dollar index and US bond yields remain high, foreign investors are unlikely to buy any time soon.
The decline in midcap and smallcap stocks comes after several years of stellar performance, according to a report by BNP Paribas Securities. The last time these two indices recorded weak performance was in calendar year 2019. At that time Nifty Midcap 100 and Nifty Smallcap 100 had fallen by 4 per cent and 10 per cent respectively.
The BNP Paribas report said that since then there has been a strong rise in mid- and small-cap stocks, making their valuations expensive compared to large-cap stocks. As a result, they see better value in largecap stocks and prefer them over midcap and smallcap stocks in 2025.
So far in calendar year 2025, 109 out of 150 stocks (72 per cent) included in the Nifty Midcap 150 index are trading below their 200-day moving average (DMA). On the other hand, 171 stocks (68 percent) included in the Nifty Smallcap 250 index are trading below their 200 DMA. 200-DMA is the average of the last 200 days of closing prices of a stock.
Kalyan Jewellers, Keynes Technology, Aditya Birla Real Estate, KEC International, Oracle Financial Services Software, Oberoi Realty and PB Fintech are now among the worst performing stocks in calendar year 2025.
According to ACE Equity data, these shares have declined by 37 percent during this period. Vodafone Idea, SBI Cards & Payment Services, Naveen Fluorine International, SRF, Shyam Metallics & Energy, Redington and Sundaram Finance are some of the stocks which have gained up to 20 per cent against the trend in calendar year 2025.