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Charts & Analysis

Charts: Nifty Hugely Underperforms Mid and Small Caps Since October

What’s interesting in the last two months has been the massive outperformance of the small caps over the index. Even as the Nifty has recovered from, then fallen back to the lows of October, the Mid and Small cap indexes have done way better.


With a 4% return since October, the Nifty’s way less of a performer – in the face of massive FII selling – as compared to the Mid and Small cap indexes.

And this is relatively recent – look at the performance over the entire year. The Mid and Small cap indexes typically retreat to close to the Nifty return after small bouts of outperformance.

Nifty underperforms mid and smallcaps

Just a note: This kind of outperformance will be explained by “domestic money” flowing into markets and that this time is different etc. It usually doesn’t work that way, and this difference won’t last long. It remains to be seen what changes – do large caps move up, or mid/small caps collapse? My fear is the latter, and that’s one reason to keep strong stop losses on those glittering mid and small caps.

  • Dinesh Nagpal says:

    One possible reason for this mid cap and small cap out-performance can be due to the change in lot size for derivative trades.Retail seems to have switched lock stock and barrel. Yes, your view that this disparity between large caps and mid/small caps will not continue for long appears on the right track as large caps largely reflect the state of the economy and mood of the market. Also the track record for the last 10 years suggest whenever penny stocks perform for a quarter the subsequent quarter sees a massive dump. Multi-Bagger turns out to make Multiple Beggars!