Nifty Smallcap Index Sees Worst January Fall; Down Over 13%

The Nifty Smallcap 100 Index is a key benchmark representing the performance of the small-cap segment of the Indian financial market. Comprising 100 actively traded stocks listed on the National Stock Exchange (NSE), it provides insights into the health and trends of this market segment.

A Sharp Fall in the Nifty Smallcap 100 Index

On January 27, 2025, the Nifty Smallcap 100 Index fell sharply by 4%, reaching its lowest point in seven months. The bearish market sentiment was evident, with 90 stocks declining while only 10 stocks managed to eke out gains. This broad sell-off underscored the challenging environment for small-cap investors.

A January to Remember

January 2025 has been particularly harsh for the Nifty Smallcap 100 Index:

• The index has declined by 13.3% in January, marking its steepest fall in the month since 2012.
• This represents an 18% correction from the highs seen in December 2024.
• The last double-digit January correction occurred in 2016 when the index fell by 11.02%.

Valuation Perspective of Smallcap Index

As of January 24, 2025, the Nifty Smallcap 100 Index’s Price-to-Earnings (PE) ratio stood at 31.2. Here’s how it compares:

• Near-term averages: 1- and 3-month ranges align closely with the current PE.
• 6-month average: Slightly higher at 32.83, indicating a recent moderation in valuations.
• Longer-term averages: The current PE remains above the 1-, 2-, and 5-year averages of 30.57, 26.09, and 28.13, respectively.

Performance Comparison with Nifty50

After a strong performance in recent years, the Nifty Smallcap 100 Index has lagged behind the broader Nifty50 Index in 2025. This reversal indicates a shift in market dynamics, with large-cap stocks possibly gaining favour amidst market volatility.

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