BSE Stocks Drop Up to 25% as Market Shows Mixed Signals: Smallcaps Struggle

BSE Smallcaps Lag, Some Stocks Fall 10–25% as Markets Show Mixed Performance

The broader Indian equity indices witnessed mixed trends in the second week of October, with smallcaps underperforming while largecaps and select sectoral indices maintained positive momentum. Analysts say the holiday-shortened Diwali week may see cautious trading, with investors eyeing upcoming US inflation, employment data, and India’s PMI figures.

The BSE Smallcap Index fell 0.6%, dragged down by stocks such as Amal, Magellanic Cloud, VL E-Governance, Lotus Chocolate Company, Dhunseri Ventures, and Walchandnagar Industries, which lost between 15-25%. In contrast, Nifty50 rose 1.67% to 25,709.85, and the Sensex climbed 1.75% to 83,952.19, while the BSE Midcap Index ended largely flat.

FIIs and DIIs Show Divergent Trends

Foreign Institutional Investors (FIIs) remained net sellers for the week, offloading equities worth Rs 586.76 crore, even though they were net buyers in the last three sessions. On the other hand, Domestic Institutional Investors (DIIs) continued their buying spree, investing Rs 28,044.45 crore in the 26th consecutive week.

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Sectoral Performance: Realty, Capital Markets, and FMCG Lead Gains

Sectoral indices displayed a mixed trend:

• Nifty Realty: +4%

• Nifty Capital Markets: +4%

• Nifty FMCG: +3%

• Nifty Auto: +2%

• Nifty Media: -2.7%

• Nifty IT: -1.8%

• Nifty Metal & PSU Bank: -0.5% each

Analysts highlighted that realty, capital markets, and FMCG sectors attracted strong domestic flows, while IT and media struggled amid profit-booking.

Technical Analysis: Bullish but Profit Booking Likely

Amol Athawale, VP of Technical Research at Kotak Securities, said:
“Benchmark indices are holding higher highs and higher lows on daily and intraday charts. Weekly charts formed long bullish candles, indicating potential for further uptrend. However, temporary overbought conditions may trigger profit booking at higher levels.”

• Nifty50 support: 25,550–25,350

• Nifty50 resistance: 26,000–26,300

• Bank Nifty support: 57,000

• Bank Nifty resistance: 58,000–58,500

Smallcap Winners Amid Broad Underperformance

Despite the overall slump in smallcaps, some stocks delivered strong gains:

• Share India Securities, Stallion India Fluorochemicals, GM Breweries, Tatva Chintan Pharma Chem, MTAR Technologies: +21–41%

This divergence underscores the selective opportunities in the broader market even during underperformance phases.

Nifty50 Outlook: Eyes on 26,000 and Beyond

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, noted:
“Nifty’s weekly chart shows a decisive breakout around 25,400–25,500, with higher tops and bottoms intact. Next upside target is around 26,200, while immediate support is at 25,500.”

Ajit Mishra, SVP Research at Religare Broking, added that early-week trading will be shaped by quarterly results of heavyweights such as Reliance Industries, HDFC Bank, and ICICI Bank. Their performance could dictate market direction in the short term.

Vinod Nair, Head of Research at Geojit Investments, highlighted:
“Market optimism is bolstered by clarity in India-US trade relations, with both sides tentatively aiming to conclude the first phase of the deal by November. Investors are likely to remain focused on high-quality names across consumption, banking, and real estate.”

Investor Strategy: Focus on Quality Names

Given the broader underperformance in smallcaps, analysts suggest:

• Prioritize largecap and midcap stocks for long trades

• Monitor sectoral earnings and global macroeconomic cues

• Expect renewed buying in case of market corrections, particularly in high-quality consumption, banking, and realty stocks

Traders are advised to remain cautious during the Diwali-truncated trading week, keeping an eye on upcoming economic data releases in both India and the US.

Conclusion: Cautious Optimism Amid Mixed Market Trends

While smallcaps slipped 10–25%, largecaps and benchmark indices continue to display bullish momentum, supported by domestic inflows and positive technical patterns. The market is poised for selective opportunities, with investors advised to focus on quality names and index heavyweights while monitoring upcoming earnings and policy signals.

The Diwali week may bring volatility amid holiday-shortened sessions, but the longer-term trend in Indian equities appears constructive, driven by earnings recovery and global trade clarity.

• Bank Nifty
• Nifty 50
• Sensex