Over 100 Small-Cap Stocks Jump 10–28% on FII Inflows, Monsoon Optimism

Benchmark Indices Register Sharpest Weekly Gains Since February 2021

The Indian equity market experienced a strong bullish run during the holiday-shortened week, with major indices recording their best performance since early 2021. The BSE Sensex surged by 3,395.94 points or 4.51% to close at 78,553.20, while the Nifty50 advanced 1,023.1 points or 4.48% to end the week at 23,851.65. The rally was underpinned by robust foreign institutional investor (FII) inflows, renewed optimism over an above-normal monsoon, and easing concerns around U.S. tariff escalation following exemptions on key tech products.

The broader indices mirrored the uptrend, with the BSE Large-cap, Mid-cap, and Small-cap indices all rising more than 4%. The BSE Small-cap index jumped 4.7%, buoyed by over 100 small-cap stocks notching gains of 10–28% during the week.

Highlights

• Sensex and Nifty posted their largest weekly gains in over three years.

• BSE Small-cap index up 4.7%; over 100 small-cap stocks gained 10–28%.

• Strong FII inflows amid easing U.S. tariff tensions and favorable monsoon forecasts.

Sectoral Outperformance: Banking, Realty, and Media Lead the Charge

All sectoral indices closed the week in the green. Notably, the Nifty Realty and Private Bank indices surged 7% each, while the Nifty Bank index rose by 6.4%. The Nifty PSU Bank index climbed 5.6%, and the Nifty Media, Oil & Gas, and Auto indices recorded gains of 5%, 4%, and 4% respectively.

According to Vinod Nair, Head of Research at Geojit Financial Services, the rally was driven by a pause in U.S. reciprocal tariffs and continued buying from FIIs. A forecast of above-normal monsoon and a supportive monetary backdrop have lifted investor sentiment.

He noted that a reduction in deposit rates by leading banks is likely to improve margins, making banking stocks especially attractive. Bank Nifty, in particular, has emerged as a favored bet due to this positive environment, and is now nearing its all-time highs.

Highlights

• Nifty Realty and Private Bank indices up 7%; Bank Nifty up 6.4%.

• Strong margin outlook for banks due to deposit rate cuts.

• Favorable macroeconomic environment driving optimism in domestic sectors.

FII Turnaround and Small-Cap Outperformance

Foreign Institutional Investors (FIIs) turned net buyers after two weeks of outflows, injecting ₹14,670.14 crore into Indian equities. Meanwhile, Domestic Institutional Investors (DIIs) booked profits, selling ₹6,470.52 crore worth of equities. The reversal in FII behavior significantly lifted market sentiment, especially in the mid and small-cap space.

Small-cap gainers during the week included Mercury Ev-Tech, Cupid, Goldiam International, Magellanic Cloud, Fino Payments Bank, Rajoo Engineers, Optiemus Infracom, Gujarat Themis Biosyn, Garware Hi-Tech Films, Shilchar Technologies, and Krystal Integrated Services, which rose between 18–28%. However, a few small-cap counters like Gensol Engineering, Easy Trip Planners, Valiant Organics, Sai Silks Kalamandir, Hampton Sky Realty, and KR Rail Engineering faced selling pressure.

Highlights

• FIIs turned net buyers with ₹14,670 crore inflows; DIIs sold ₹6,470 crore.

• Select small-caps rallied over 25%; broad-based participation seen across market cap segments.

• India emerged as the first major market to recover from early-April tariff shocks.

Bullish Momentum with Key Resistance and Support Zones

Technically, the Nifty has formed strong bullish candles on both daily and weekly charts, confirming underlying strength. Hrishikesh Yedve of Asit C. Mehta Investment Intermediates noted that sustaining above 23,900 could extend the rally to 24,050 and potentially 24,200. Key support levels lie at 23,800 and 23,500, with a “buy-on-dips” strategy favored as long as these levels hold.

Amol Athawale of Kotak Securities highlighted that the market has moved above the 20-day and 50-day simple moving averages, signaling a continuation of the uptrend. While temporary overbought conditions may cause some range-bound action, the short-term outlook remains positive. Key resistance is projected at 24,000–24,200 for the Nifty and 79,000–79,600 for the Sensex, while support rests at 23,500/77,400 and 23,350/76,900 respectively.

Highlights

• Nifty poised for further gains if it sustains above 23,900; next resistance seen at 24,200.

• Immediate supports: Nifty at 23,800 and 23,500; Sensex at 77,400 and 76,900.

• Overbought conditions could lead to range-bound trading; bullish structure intact.

Sector Rotation and Earnings Commentary to Drive Next Moves

Analysts believe the rally could transition into a more sector- and stock-specific phase in the coming week. With Q4 FY25 earnings releases underway, investor focus will shift toward management commentary and forward guidance. While the broader macro environment remains favorable, earnings growth may be subdued due to demand softness and margin compression, especially in export-heavy segments.

Investors are advised to focus on domestic growth stories in sectors like banking, healthcare, infrastructure, and consumer goods, while maintaining caution around export-led themes. The inflation outlook also appears benign, supported by falling oil prices and expectations of strong agricultural output post monsoon.

Highlights

• Sectoral rotation likely as Q4 earnings season gains momentum.

• Focus on domestic growth themes amid concerns over export-related earnings.

• Inflation outlook supportive, with oil prices declining and monsoon expected to be above normal.