Smallcap and midcap stocks plunged up to 4% on Friday, extending a sharp weekly selloff as margin calls and portfolio losses weighed heavily on retail investors. According to reports from The Hindu BusinessLine, the Nifty Smallcap 100 index shed nearly 3% to close at 17,571.60, while the Nifty Midcap 150 fell 2.1% to 55,208.95. The broader market underperformed benchmark indices, with the BSE Sensex declining 0.17% to close at 73,123.83, swinging between a session high of 73,766 and a low of 72,452, and the NSE Nifty 50 ending 0.39% lower at 22,600 after slipping to an intraday low of 22,372. The crash has been particularly severe this week, with the smallcap index plunging 7.4% over the past week and down over 10% from its 52-week high of 20,187.80, and the midcap index falling 5.86% weekly and down over 12.9% from its 52-week high of 64,450.90. Vinod Nair, Head of Research at Geojit Investments, noted that the key concern is the disproportionately sharp correction in mid- and small-caps relative to the Nifty, with valuation concerns and unwinding of leveraged positions intensifying pressure on the broader market.
The latest selloff has marked a historic low for small and midcap segments, with the Nifty Smallcap 250 posting its worst weekly decline in two years at 7.10%, while the Nifty Midcap 150 recorded its worst seven-day fall since October 2024 at 5.26%, according to The Economic Times. Friday's session saw the Small-cap 250 drop 2.8% and Mid-cap 150 fall 2.1%, with the market capitalisation of all BSE-listed companies falling 1.42% or ₹6.54 lakh crore to ₹453.45 lakh crore. The India VIX rose 6%, indicating heightened uncertainty in the near term. Nilesh Shah, Managing Director at Kotak Mahindra Asset Management, noted that markets are driven by flows, sentiment and fundamentals, with high supply from FPIs and IPOs contributing to the current weakness. So far in 2026, the Sensex and Nifty have retreated 14.2% and 13.2% respectively, while the Mid-cap 150 has declined 7% and Small-cap 250 dropped 1.8% before this week's correction.
The current selloff has been significantly driven by a sharp rise in crude oil prices, with Brent crude climbing to $114.31 per barrel, marking a rise of about 6% in the last week, according to The Economic Times. As reported by The Hindu BusinessLine, the Nifty Smallcap 250 has crashed nearly 12.5% after hitting a 52-week high of 18,551 in early September this year, and the Nifty Midcap 100 has fallen 14% in less than two months after reaching a 52-week high of 64,451 late in August. Higher oil prices can increase India's import bill, put pressure on the rupee and add to inflationary risks, with aviation, paints, chemicals, logistics and other businesses dependent on petroleum-based inputs facing higher costs. The metal and realty stocks recorded some of the sharpest sectoral losses, while IT shares showed relative resilience amid the wider downturn. With Brent crude approaching $115 a barrel, imported inflation and corporate margin pressures remained the dominant macro overhang, as noted by The Hindu BusinessLine.
The damage was broad and deep across all sectors, with all sectoral indices ending in negative territory and 460 of the 500 most-tracked stocks closing in the red, according to The Hindu BusinessLine. Realty stocks fell as much as 5%, with Godrej Properties losing over 4.4% after its quarterly results, while Metal, Realty and PSU Banks were among the worst performers. Bank Nifty closed near 54,300, down 638 points, after swinging more than 1,000 points intraday. Eternal and Apollo Hospitals were among the few Nifty gainers, while Shriram Finance and Adani Enterprises were the notable laggards. The Nifty Midcap 150 lost 2.94% and the Nifty Smallcap 100 shed 2.21%, highlighting the severe impact on broader market segments. Nilesh Shah noted that after a strong rally in the past months, stocks with weaker earnings profiles have been most exposed when sentiment turned, and liquidity tightened, with the market now demanding more reasonable valuations.
The domestic market selloff was compounded by unfavorable global cues, with overseas markets remaining weak after a sharp decline in US technology stocks and weakness across Asian markets. On Thursday, the Nasdaq Composite fell 2.60% to 26,008.86, while the S&P 500 declined 1.21% to 7,663.43, according to Business Standard. Asian equities also traded lower on Friday morning, with Japan's Nikkei, Hong Kong's Hang Seng and China's Shanghai Composite among the indices registering declines. Foreign institutional investors (FIIs) sold Indian equities worth ₹3,458.70 crore on October 21, while domestic institutional investors (DIIs) purchased shares worth ₹2,891.32 crore, highlighting continued domestic institutional support despite overseas selling. Foreign portfolio investors (FPIs) net bought shares worth ₹887.65 crore on Friday, though their total net sales in October so far total ₹51,466 crore, compared with exits worth ₹44,012 crore in September. Domestic institutional investors (DIIs) remained net buyers of equities worth ₹3,235 crore Friday, taking their net purchases this month to ₹59,110 crore, as noted by The Economic Times.
