The Indian stock market saw sharp declines in smallcap and midcap stocks on March 10, with the Nifty Smallcap index falling nearly 2% to 15,250 and the Nifty Midcap index declining 2% from the day’s high to 48,448. This snapped a 4-day gaining streak for smallcaps, as selling pressure mounted in the broader market.

Smallcap Stocks Witness Heavy Selling

The downturn in smallcap stocks was led by 360 One WAM, which plunged 7% to ₹906 per share, recovering slightly from an 8% fall to ₹893, marking its steepest drop in three years. This came as capital market-focused stocks extended their decline.

Other major smallcap losers included:

• Apar Industries (-6%)
• Triveni Turbine (-6%)
• Titagarh Rail Systems (-5%)
• Birlasoft (-5%)
• Sterling and Wilson Renewable Energy (-5%)
• ITI Ltd. (-4%)

Despite the negative sentiment, a few smallcap stocks managed to buck the trend, with Aavas Financiers rising over 6% to ₹1,807 per share, making it the top gainer in the segment.

Midcap Stocks Face Pressure, Dixon Technologies Leads Losses

The Nifty Midcap index also saw a sharp pullback, falling 2% from the day’s high after a flat opening.

Top midcap losers:

• Dixon Technologies (-5%)
• Kalyan Jewellers (-5%)
• BSE Ltd. (-4%)
• CG Power (-4%)
• FACT (Fertilisers and Chemicals Travancore Ltd.) (-4%)

Some Midcaps Defy Market Trend

Despite the selloff, some midcap stocks recorded gains, including:

• Solar Industries
• Policybazaar-parent PB Fintech
• Torrent Power
• Indus Towers

These stocks rose up to 4%, providing some resistance to the broader market decline.

Market Experts’ Take on the Correction

Krishna Appala, Senior Research Analyst at Capitalmind Research, stated that the broader market may consolidate unless earnings growth picks up.

"While large caps appear better placed, the broader market may consolidate unless earnings growth picks up. Strong inflows into small caps in recent years have elevated valuations, making them more vulnerable to corrections if earnings do not keep pace. With volatility still low and markets not yet at full capitulation, a measured approach remains prudent—staggered large-cap allocations, selective mid-cap exposure, and caution in small caps until earnings visibility improves."

The sharp fall in smallcap and midcap indices signals a correction in the broader market, as concerns over valuations, profit-taking, and market sentiment weigh on stocks. While some stocks continue to outperform, investors are advised to be cautious in the smallcap space, with earnings growth and fundamental strength becoming key factors for future market direction.

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