The broader market has seen a strong rally over the past four sessions, driven by easing selling pressure from foreign institutional investors (FIIs). The Nifty Smallcap 100 index gained nearly 5%, outperforming both the Nifty 50, which rose 4.21%, and the Nifty Midcap 100, which climbed 3.32%.
On November 27, the Nifty Smallcap 100 hit an intraday high of 18,474.35, up 1.14%, while the Nifty reached 24,341.15, gaining over half a percent. However, the Nifty closed slightly in the red on November 26, diverging from the consistent gains in small- and mid-cap indices.
Market experts attribute this rally to reduced FII outflows, with a shift to marginal buying. Small- and mid-cap stocks, which are more liquidity-sensitive, have benefited the most. Analysts believe the rally reflects growing optimism about better earnings in the second half of FY25 for these segments.
Manish Chowdhury from StoxBox noted that the correction in smaller stocks earlier this year has created bargain opportunities. Similarly, V.K. Vijayakumar of Geojit Financial Services sees the FII buying as a positive signal for market sentiment, particularly for undervalued small and mid-cap stocks.
The broader market’s performance also highlights investor interest in sectors like defense, shipping, power, and railways, where PSU stocks offer favorable risk-reward opportunities after sharp corrections.
While the Nifty 50’s growth has been weighed down by underperforming heavyweights like Reliance Industries and concerns over the Adani group, the broader rally showcases a shift towards undervalued and high-growth opportunities.
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