Smallcap Index suffers steepest monthly decline since Covid-19 crash
India’s Nifty Smallcap 100 index plunged nearly 4 per cent on January 27, 2025, deepening its monthly losses to over 12 per cent – marking the worst decline since March 2020’s Covid-19 market crash. The selloff saw no gainers among index constituents, with stocks falling up to 5 per cent in morning trade.
The decline marks the first double-digit monthly drop since February 2022, extending the index’s losing streak to three consecutive weeks. Foreign investor selling pressure and deteriorating market sentiment have particularly impacted the broader market indices.
Analysts attribute the sharp correction to multiple factors, including disappointing corporate earnings, reduced consumer spending, and currency weakness. Historical data reveals the index has shown weak seasonal performance in January, delivering negative returns in 57 per cent of cases over the past 14 years.
Despite the current downturn, the index has demonstrated resilience historically. Following the March 2020 crash, it rebounded to close that year with gains exceeding 21 per cent. The Nifty Smallcap index has achieved double-digit positive returns in four of the last five years, with 2022 being the only exception.
The prolonged weekly decline represents the longest downturn since late October, as sustained foreign selling continues to pressure mid and small-cap stocks.
