Selective recovery: 50 small caps post double-digit gains, returning up to 33% last week

Small caps put on quite a show last week, with as many as 50 stocks posting double-digit gains. According to data from Ace Equity, these stocks delivered returns of between 10% and 33% over the week, indicating opportunities in the broader market if fundamentals are strong. The rally was led by VTM, which rose 33% in five sessions, followed by Yatra Online, up 29%, and Indigo Paints, which rose 29%.Textile, consumer and niche manufacturing stocks were prominent among the gainers. Pearl Global Industries (up 24.18%), SP Apparels (up 17.07%), Indo Count Industries (up 11.89%) and KRBL (up 12.08%) suggested a renewed interest in export-oriented and consumption-related activities.

Yatra Online’s 29.4% rise reflected optimism around travel demand and digital platforms, while Indigo Paints’ 29.27% ​​rise indicated continued optimism around luxury home improvement themes. Names from the healthcare and pharmaceutical industries also featured prominently in the weekly figures. Bliss GVS Pharma rose 26.39%, Cupid gained 20.17%, KMC Specialty Hospitals (India) rose 13.60%, Krsnaa Diagnostics advanced 11.38% and Thyrocare Technologies added 12.30%.

The breadth of participation in diagnostics, hospitals and pharmaceutical midcaps suggests that investors are selectively adding to defensive growth markets as earnings visibility improves.

Analysts say the select rebound in small caps is due to an improving macro and earnings environment. “A positive turnaround in Q2 FY26 results and favorable inflation make the earnings outlook for Q2 FY26 brighter. Investors are looking for additional catalysts for a decisive move from current levels. The upcoming RBI policy meeting and any signals on a US trade deal are expected to keep market sentiment upbeat,” said Vinod Nair, head of research at Geojit Investments.

That macro comfort is reinforced by the index setup. Nifty’s continued position above 25,600 and a week 2 close above 25,900 indicate stronger momentum in the near term, with a potential breakout above the 25,950-26,000 range, creating space towards 26,200-26,300 and even 26,500 in the near term. to new catalysts to boost near-term sentiment,” said Ponmudi R, CEO, Enrich Money. Any incremental progress in India-US trade talks, along with policy signals on growth and liquidity from the RBI, could determine whether last week’s double-digit small cap gains mark the start of a broader catch-up rally or just an early burst of outperformance. Also Read | Midcap mutual fund inflows outpace small caps for three straight months. Become investors selective?

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of the Economic Times.)