Broader Market Outperforms as Over 50 Smallcap Stocks Rally Up to 54%

More Than 50 Smallcaps Surge Up to 54% as Broader Markets Outperform; DII Buying Counters FII Selling

The broader Indian markets outperformed the benchmarks for the second straight week, with more than 50 smallcap stocks gaining up to 54 percent, even as volatility persisted due to foreign fund outflows and mixed quarterly earnings. Domestic Institutional Investors (DIIs) continued their strong support, helping markets absorb the pressure from sustained FII selling.

According to exchange data, DIIs purchased equities worth ₹18,804 crore during the week, while Foreign Institutional Investors (FIIs) remained net sellers to the tune of ₹2,102 crore. This marks the 28th consecutive week of DII buying, reinforcing domestic confidence amid global uncertainty.

Broader Indices Continue to Outperform Benchmarks

Despite intermittent volatility, the BSE Midcap and Smallcap indices rose 1 percent and 0.7 percent, respectively, outperforming the benchmark indices. In contrast, the Sensex fell 273.17 points (0.32%) to close at 83,938.71, while the Nifty50 declined 155.75 points (0.60%) to settle at 25,722.10.

On a monthly basis, FII outflows narrowed compared with previous months. FIIs sold equities worth ₹2,346 crore in October, while DIIs made net purchases of ₹52,794 crore, signaling strong domestic institutional conviction.

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Sectoral Highlights: PSU Banks and Metals Lead the Charge

Among key sectoral indices, Nifty PSU Bank was the standout performer, surging 4.7 percent on reports of a potential hike in foreign investment limits. The Nifty Oil & Gas index rose 3 percent, followed by Nifty Metal at 2.5 percent and Nifty Energy at 1.8 percent.

On the flip side, Nifty Healthcare, Auto, and Private Bank indices slipped about 1 percent each, indicating mild sectoral rotation as investors booked profits in defensives.

Vinod Nair, Head of Research at Geojit Financial Services, noted that markets witnessed profit booking in the final week of October as investors chose to lock in gains after a sustained rally.

“While PSU banks surged on reports of a potential hike in foreign investment limits, metal counters gleamed on optimism after China’s commitment to curb steel overcapacity and progress in US-China trade talks. However, SEBI’s proposed overhaul of TER structures weighed on capital market stocks,” Nair said.

Volatility in Commodities and Global Cues Influence Sentiment

Global cues continued to sway investor mood. Precious metals witnessed sharp volatility, with prices falling from recent record highs amid a stronger US dollar and profit booking following a Fed rate cut accompanied by a hawkish tone. The US 10-year Treasury yield also moved higher, dampening risk sentiment across global equities.

Nair added,

“The markets are now watching trade developments between the US and key Asian economies. Meanwhile, India’s corporate earnings season has been mixed so far, but expectations remain optimistic for a stronger second half supported by monetary and fiscal measures.”

Smallcaps Shine: Over 50 Stocks Gain Up to 54%

The BSE Smallcap Index emerged as the star performer, climbing 0.7 percent, led by a flurry of strong movers.
Top gainers included Lancer Container Lines, Chennai Petroleum Corporation, Hatsun Agro Products, Spectrum Electrical Industries, Blue Cloud Softech Solutions, Mufin Green Finance, Five-Star Business Finance, and TD Power Systems, each gaining between 20 to 54 percent during the week.

However, a few smallcaps faced selling pressure. Stocks like Khaitan Chemicals & Fertilizers, LE Travenues Technology (Ixigo), Stallion India Fluorochemicals, Cohance Lifesciences, Sadhana Nitrochem, JITF Infralogistics, Fino Payments Bank, Quadrant Future Tek, Dynamic Cables, Nalwa Sons Investment, and GFL fell between 10–19 percent.

Market Outlook: Range-Bound With Positive Bias

Market experts suggest that indices are likely to remain range-bound with a positive bias as investors monitor global developments, fund flows, and the upcoming batch of corporate results.

Siddhartha Khemka, Head of Research (Wealth Management), Motilal Oswal Financial Services, said,

“Resilient domestic fundamentals continue to provide support, even as external uncertainties could limit near-term upside. Next week’s focus will be on monthly auto sales, festive demand indicators, and results from large-cap names like SBI, Titan, and Bharti Airtel.”

From a technical standpoint, Amol Athawale, VP – Technical Research at Kotak Securities, said that 25,700–25,650 (Nifty) and 83,900–83,700 (Sensex) will act as strong support zones.

“Resistance is seen at 26,000–26,100 (Nifty) and 85,000–85,300 (Sensex). A breakout above these levels could push markets toward 26,350/86,100, while a breach below support may invite profit booking,” he added.

Hrishikesh Yedve, AVP – Technical and Derivative Research at Asit C. Mehta Investment Intermediates, observed that the Nifty has formed a shooting star pattern on the weekly chart, indicating profit-taking at higher levels.

“If Nifty sustains below 25,670, weakness could extend toward 25,400 levels. On the upside, 26,100 remains a crucial resistance zone,” Yedve said.

Conclusion

Despite foreign fund outflows and intermittent profit booking, India’s equity markets remain structurally strong, supported by steady DII inflows, improving earnings visibility, and optimistic domestic sentiment. Smallcap and midcap segments continue to showcase investor interest, hinting that market participation remains broad-based.

As festive demand data and global developments unfold, investors are likely to stay cautiously optimistic, with any dip viewed as a buying opportunity in quality stocks across core sectors.

• Nifty 50
• Bank Nifty
• Sensex