India’s stock market has split into two sharply divergent camps as largecap stocks have been battered into valuations last seen around the Covid crash, while smallcaps continue to trade at multiples that imply strong earnings growth ahead.
The Nifty has fallen 14% so far in 2026, even as the Nifty Midcap 150 has declined just 2%, the Nifty Smallcap 100 has gained 8% and the Nifty Microcap 250 has climbed 15%. Foreign investors have sold a record ₹2.8 lakh crore of Indian equities this year, intensifying the pressure on large, liquid stocks.
