The process of decline in midcap and smallcap stocks continues. Along with this, the last one year returns of BSE Midcap and BSE Smallcap Index have now become negative for dollars. Both index have fallen in the dollar term up to about 1%. At the same time, in the term of Indian rupee, their return of the last one year is now just 3.5 %. However, Sensex and Nifty are still showing strength and they are trading about 6 percent in the last one year in terms of rupee. While in terms of dollars, they are about 2 percent above.
Weakness of rupee increased pressure
The Indian rupee has fallen by about 1.2 per cent in 2025 against the US dollar. With this, it has become the second weakened currency of Asia after Indonesian Rupiah this year. On 10 February, the rupee reached a record low of 87.95 per dollar, while it was 85.50 per dollar at the beginning of the year.
Midcap and smallcap declined drastically
So far this year, BSE midcap and smallcap indexes have fallen by about 11 percent and 13 percent respectively in the rupee’s term, while both have fallen by 15 percent and 18 percent respectively in terms of dollars. Apart from this, from the recent peak of September 2024, both index has fallen by more than 19 percent and 20 percent in Indian rupees, while in terms of dollars they have fallen more than 22 percent to enter ‘Bay Market’.
Hardik Mangalia, derivative analyst at Choice Broking, said “This decline is confirmed that the market is still in ‘Bearish Trend’, as both index charts are making lower high and lower low, which is a sign of weakness.”
No signal signs
Market analysts say that at present there are no signs of recovery in the stock market. Any small rally can only be “dead cat bounce”, which means that it is a temporary bounce, not permanent recovery. The midcap and smallcap index are trading below all its important long, short and medium -term experienced -term experienced averages (EMA), which reflects negative trends.
FIIS sells continue
Foreign institutional investors (FIIs) are continuously selling from Indian equity markets. This is also a major reason for the decline in these shares. Weak growth, decreasing corporate earnings and fears of tariff war have spoiled investors’ senses.
Valuation and Market Outlook
Talking about valuations, the BSE Midcap index currently has a one -year forward P/E ratio 26.34x, while its average of 10 years is 24.07x. At the same time, one year forward P/E ratio of the BSE Smallcap index is 22.54x, while its 10 -year average is 19.03x.
More than 100 stocks of BSE Midcap Index and more than 760 stocks of BSE Smallcap Index are trading below their 200-day moving averages. 63 stocks of the MIDCAP index and 510 stocks of the Smallcap index have given negative returns in the last one year.
Also read- Stock Market Crash: Due to these 5 reasons in the stock market, Sensex breaks 850 points, ₹ 7 lakh crore of investors drowned
Disclaimer: The ideas and investment advice given by experts/brokerage firms on Moneycontrol are their own, not the website and its management. Moneycontrol advises users to consult a certified expert before making any investment decision.