In total, 321 smallcap stocks collapsed over 20% in just a month, while 243 smallcaps have lost more than half their value from their 52-week highs. 
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In total, 321 smallcap stocks collapsed over 20% in just a month, while 243 smallcaps have lost more than half their value from their 52-week highs. Amid ongoing pain in the markets, Wisdom Hatch founder Akshat Shrivastava remarked on the challenges faced by retail investors. “You might feel cheated. But, can't do jacksh*t. You are trapped at high prices. And, are now waiting for a recovery. So that you too can exit (at least partially),” he wrote in a post on X.
The sharp correction in India’s small and midcap stocks has left many in a bind, waiting for a turnaround just to cut their losses. The worst crash since March 2020 has erased massive wealth, challenging long-held investment strategies.
February saw the BSE Smallcap index nosedive 14%, its first double-digit monthly fall since the pandemic-driven crash. The Nifty Midcap 100 tumbled 10.8%, triggering widespread panic-selling. Among the hardest-hit were stocks like Vakrangee, Zen Technologies, Oriental Rail Infra, and Suratwwala Business Group, which plunged between 40% and 66%.
In total, 321 smallcap stocks collapsed over 20% in just a month, while 243 smallcaps have lost more than half their value from their 52-week highs.
Investor sentiment is crumbling as a mix of weak global cues, political uncertainty, and liquidity concerns fuel fears of an extended downturn. The Nifty Midcap 100 recently hit its lowest level since March 2024, while the Nifty Smallcap 100 sank 3% to its weakest close since March 19, 2024.
This market crash is a lesson in how past performance doesn’t guarantee future results. Shrivastava pointed to a common investment mantra—SIP into equities for long-term wealth creation—as being overly relied upon. “Look at last 20-year returns,” many argue, reinforcing the belief that equity SIPs alone will lead to massive portfolios. But the current market scenario exposes the flaws in that assumption.
“It is evident that this money is now being used to give exits to FIIs,” Shrivastava said. Foreign investors have been cashing out while retail investors find themselves stuck at elevated valuations, hoping for a turnaround.
Pratik Gupta of Kotak Institutional Equities has long cautioned about the risks in small and midcap stocks. “We remain cautious on the outlook for small/mid-caps in general due to expensive valuations in many cases. We have been negative for a while, and despite the correction, we do not believe the valuations have come down enough.”
Shrivastava believes investors must adapt and diversify. Relying solely on equities is no longer the best path forward. He urges investors to broaden their horizons:
“The more investment options you have access to, the easier your life will get,” he advised.
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