Stock market selloff: Rs 15,56,572 crore gone as 83% smallcaps enter correction mode in 2025

Jai Corp Ltd, Vakrangee Ltd, Zen Technologies Ltd, Quick Heal Technologies Ltd, Swelect Energy Systems Ltd and Precision Camshafts Ltd are among smallcap stocks that have lost up to 70 per cent of their market values, with the total losses for 940-odd smallcap stocks mounting to nearly Rs 16 lakh crore in 2025 so far.

A total of 55 per cent or 518 out of 936 BSE Smallcap index constituents are under the bear grip now, losing over 20 per cent of their market values. A total of 778 or 83 per cent of the index stocks are down over 10 per cent in the first two months of the calendar. The Friday's selloff meant these smallcap stocks together have lost Rs 15,76,774 crore, or 20 per cent, of their market values from end-December levels. 

Jai Corp Ltd, which lost 69 per cent of its market value till Thursday, fell another 4 per cent on Friday. Suratwwala Business Group, Vakrangee, Best Agrolife, Zen Technologies and Quick Heal Technologies plunged 51-68 per cent during the same period.

Swelect Energy Systems Ltd, Summit Securities Ltd, Precision Camshafts Ltd, Oriental Rail Infrastructure Ltd, Suraj Estate Developers Ltd, WPIL Ltd, Orchid Pharma Ltd, Tilaknagar Industries Ltd, Kaynes Technology India Ltd, Netweb Technologies India Ltd and KFin Technologies Ltd saw their shares tumbling 40-45 per cent. Many of these stocks were once retail favourites. 

Pratik Gupta of Kotak Institutional Equities said he remained cautious on the outlook for small and midcap stocks in general due to expensive valuations in many cases. He said his negative view stayed despite a correction in the the Nifty Smallcap Index this year, as he does not believe the valuations have come down enough. 

"The key downside risks for the overall market are: a sharper-than-expected global slowdown, or a bad monsoon that can adversely impact farm incomes, food inflation and construction activity, or a sharp slowdown in domestic retail inflows into equities, especially into small/mid-cap funds," he said.

Nomura India said smallcap valuations relative to larger-cap Nifty stocks remained elevated and so do valuations of midcap stocks. Its strategy team prefers largercap stocks over small-mid cap stocks. The brokerage said the broader market is technically oversold now, and if one goes by history, a recovery is in the offing. However, weak earnings growth and high valuations in India could still play a spoilsport.