While benchmark indices have remained 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. Various sectors within the SMID category — such as defence, auto components, chemicals, construction materials, jewellery, metals and mining, and structural steel tubes — have demonstrated strong earnings momentum.
Nifty Midcap 100 and Nifty Smallcap 100 – Gainers and laggards
Among the top Nifty Midcap 100 gainers year to date, led the rally with a surge of 58.73%, followed by , which gained 50.15%. NLC India rose 40.98%, while CG Power and Industrial Solutions and (SAIL) advanced 33.60% and 33.50%, respectively. Strong momentum in defence, industrials, metals, and capital-market-linked stocks largely drove the gains.
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, 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 and Multi Commodity Exchange of India advanced nearly 50% each. Strong momentum in defence, telecom infrastructure and capital market-related stocks has supported the rally.
On the losing side, IT and infrastructure-linked counters remained under pressure. Zensar Technologies declined 30.43% YTD, while Swan Energy and KEC International fell 31.75% and 34.54%
Why are small and midcaps winning the market race?
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, said small- and mid-cap stocks (SMIDs) are currently outperforming large caps, driven by better-than-expected Q4 earnings and stronger growth trajectories. He noted that SMID IT stocks have significantly outperformed their large-cap peers, lending resilience to the segment, with a similar trend visible in metal stocks as well.
Vijayakumar also highlighted that foreign portfolio investors (FPIs), who have been persistent sellers in large caps, have selectively increased exposure to SMIDs, further supporting the rally. However, he cautioned that while momentum currently favours small- and mid-caps, safety and stability remain with large-cap stocks.
Midcaps emerge stronger within the SMID rally
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.
“Between the two, the Midcap Index appears better placed to outperform the Smallcap Index, as reflected by the rising ratio line in the Midcap/Smallcap ratio chart, which highlights improving relative strength in favour of midcaps,” said Agrawal.
Technical Views
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.
In the Nifty Midcap space, Bhosale noted that while benchmark indices remain in a consolidation mode and below their all-time highs, midcaps have continued to outperform and are trading close to record levels reached a few weeks ago. He said the overall structure remains bullish, with a higher-top, higher-bottom formation, and that dips towards short-term moving averages are attracting buying interest. He advised investors to maintain a positive bias, with the 20-day EMA near 60,200 acting as immediate support, while the index could move towards the 62,800–63,000 zone in the coming weeks.
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.
On the Smallcap Index, Shah said the index has broken above its previous three-day resistance zone of 17,900–17,950 and has reclaimed its 20-day EMA after briefly slipping below it, indicating that the short-term trend remains positive. He added that the RSI is moving higher gradually, while converging DI lines suggest bulls are attempting to regain control. According to Shah, the 17,850–17,800 zone will act as immediate support, and the index is likely to trend higher as long as it holds above this level.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.