As the overall market cools off, small and midcap stocks end their multi-day rally due to valuation concerns.

Date: June 11, 2025

Source: Moneycontrol, Livemint, and Economic Times

After a strong rally in which small- and mid-cap indices outperformed benchmarks, there was a sharp reversal today. The Nifty Smallcap index dropped nearly 1% on this first red day of June, while the Midcap index fell 0.7%.

🔍 Why Did It Fall?

Profit Booking: Traders booked gains after the smallcap and midcap indices rallied for seven and five days, respectively.

Valuation Warnings: Several analysts, including Nilesh Shah of Kotak AMC and Ajit Mishra of Religious Broking, have pointed out that several segments of the broader market are trading above their long-term averages.

Performance summary: • Nifty Smallcap 100 increased by roughly 25% over three months; • Nifty Midcap gained roughly 4% in the last five days alone.

📊 Index Movement Snapshot IndexThe Change Rally Thus Far Today (June MTD) Nifty Smallcap 🔻 ~1.0% 🔺 ~6%

Nifty Midcap 🔻 ~0.7% 🔺 ~4% over the last five days

🧠 What Investors Should Learn From This Valuation Matters: Stocks can only be driven so far by momentum before being overtaken by fundamentals. This correction shows that smart money is starting to be more picky.

Quality Over Quantity: Rather than focusing solely on trending tickers in overheated segments, it is wise to focus on companies with sectoral tailwinds, lower debt, and sustainable earnings visibility.

Expect Rotation: Funds may shift from hot pockets to large-caps or defensives. Retail investors should monitor any shifts in the leadership's momentum.

🐇 Rabbit RA View: As SEBI-registered research analysts, we view today's action as a reality check rather than a panic. By focusing on entries with defined risk and clarity, our Swing Rabbit and Long Rabbit setups avoid the traps of valuation-driven euphoria.

Rabbit RA is a Research Analyst with SEBI registration number INH000010964. The only goal of this blog is education. Investments may be impacted by market risks. Please carefully read all scheme-related documents before making an investment.

To see our swing and positional setups, go to rabbitresearch.in. 📉 Small and midcaps break their multi-day rally on valuation concerns as the broader market cools off 📅 Date: 11 June 2025

Source: Economic Times, Livemint, and Moneycontrol

Today saw a dramatic reversal following a robust rally in which small- and mid-cap indices outperformed benchmarks. It was the first red day of June for the Nifty Smallcap index, which fell by almost 1%, and the Midcap index, which fell by 0.7%.

🔍 What Caused the Fall?

Profit Booking: Following a seven-day and five-day rally in the smallcap and midcap indices, respectively, traders booked gains.

Valuation Warnings: A number of analysts have noted that a number of areas within the larger market are trading above their long-term averages, including Nilesh Shah of Kotak AMC and Ajit Mishra of Religious Broking.

Performance summary: • Nifty Midcap gained about 4% in the last five days alone; • Nifty Smallcap 100 surged about 25% in three months.

📊 Index Movement Snapshot IndexThe Change Rally So Far Today

(June MTD) Nifty Smallcap 🔻 ~1.0% 🔺 ~6%

Nifty Midcap 🔻 ~0.7% 🔺 ~4% over the previous five days

🧠 What This Valuation Matters Should Teach Investors:

Stocks can only be carried so far by momentum before fundamentals overtake it. This correction indicates that smart money is becoming more selective.

Quality Over Quantity: It's advisable to concentrate on businesses with sectoral tailwinds, lower debt, and sustainable earnings visibility rather than just trending tickers in overheated segments.

Anticipate Rotation: Money may move from hot pockets to defensives or large-caps. Retail investors need to keep an eye out for changes in momentum in the leadership.

🐇 Rabbit RA View: As research analysts registered with SEBI, we see today's action as a reality check rather than a panic. Our Swing Rabbit and Long Rabbit setups steer clear of the pitfalls of valuation-driven euphoria by concentrating on entries with defined risk and clarity.

Rabbit RA is a Research Analyst registered with SEBI (INH000010964). This blog is solely for educational purposes. Market risks can affect investments. Before investing, please carefully read all documents pertaining to the scheme.

Visit rabbitresearch.in to view our swing and positional setups.