Over 1,000 small cap stocks down more than 50% from 52-week high; here’s what to do now?

At least 1,030 stocks in the small cap space eroded more than half of investors’ wealth from their respective 52-week high levels till March 5. Market watchers believe that sky high valuations, sustained outflows by foreign institutional investors and subdued global cues dented sentiment in the recent past. With a fall of nearly 23% from its 52-week high levels, the BSE Small cap index underperformed the BSE Midcap (down 20%) and the benchmark BSE Sensex (14%).

According to Motilal Oswal Finanical Services, the recent correction in broader markets factors in some of the potential disappointments in earnings ahead. “The valuations for midcaps and smallcaps are still expensive vis-à-vis their history as well as vs. Nifty-50,” the brokerage said in report.

Data showed that Remedium Lifecare tanked the most 93% to Rs 2.29 on March 5, 2025, from its 52-week high of Rs 33.25, scaled on March 11, 2024. Rossell India, Markobenz Ventures, PS IT Infrastructure & Services and Rajnish Wellness also lost more than 90% so far from their respective 52-week high levels.

Sharing his views on small and mid-cap space, G Chokkalingam, Founder, Equinomics Research said, “Combined market cap of BSE Smallcap and Midcap (SMC) indices lost over Rs 50 lakh crore from their peak levels seen in September 2024. Still there are 2 types of pockets within SMC segment. Even after meltdown there are many stocks (especially newly listed stocks and stocks of new age businesses) whose valuations are stretched. But there are many stocks of traditional businesses whose valuations are extremely appealing post meltdown. Thus, little more pain could be there in select newly listed and new age companies.”

Among the other major losers in the small cap space, Thinkink Picturez, Tirupati Tyres, Quadrant Televentures, Swati Projects, Waaree Technologies, Delta Industrial Resources, Spright Agro, AGS Transact Technologies, Alliance Integrated Metaliks, Cian Healthcare, TruCap Finance, Filatex Fashions and Money Masters Leasing & Finance also declined somewhere between 85% to 90% from their respective 52-week high levels.

Chokkalingam Further added that in the short term it would be better to focus on small and mid cap stocks which have got good management, strong balance sheets and valuation comfort. “Except banks and telecom, a majority of broad sectors are posting single digit business growth now and that scenario may continue for one or 2 more quarters,” he said.

Manish Bhandari, CEO and Portfolio Manager at Vallum Capital Advisors said, “We have seen a correction for five months in a row. Usually, corrections are over by 3 months. Hence, as per our model, we are in the last leg of further correction of 5% in mid and small-caps indices before indices settle down. Thereafter, we will witness normalisation and flat return for 1 year in mid-cap indices.”

In the SMC space, brokerage Motilal Oswal Financial Services is positive on Indian Hotels, Dixon Tech, JSW Energy, BSE, Godrej Properties, Coforge, JSW Infra, Page Industries, IPCA Labs, Metro Brands, and Angel One.

TV Vision, Noida Toll Bridge Company, Kaycee Industries, RS Software (India), Kamdhenu Ventures, Jaiprakash Associates, Eraaya Lifespaces, Wardwizard Foods and Beverages and Sri Adhikari Brothers Television Network also declined more than 75% in the ongoing bloodbath on D-Street. Some of these stocks such delivered multibagger returns to investors during the previous rally in the domestic equity markets.