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BSE Smallcap index hits 6-month high, recovers 35% from April low
The index is trading at its highest level since January 8, 2025. It has recovered 35 per cent from its 52-week low of 41,013.68 hit on April 7, 2025. Currently, the BSE Smallcap index is 4.3 per cent away from its all-time high level of 57,827.69, touched on December 12, 2024.
At 09:19 AM, the BSE Smallcap index, the top gainer among broader indices, was up 0.73 per cent, as compared to a 0.47 per cent rise in the BSE Midcap and a 0.16 per cent gain in the BSE Sensex.
In the past month, the Smallcap index gained 3 per cent, as against a 1.5 per cent rise in Midcap and a 0.66 up move in Sensex.
A total of 19 stocks, including Ceat, Allied Blenders and Distillers, Aarti Pharmalabs, Strides Pharma Science, Samhi Hotels, SML Isuzu, Thyrocare Technologies, Hawkins Cookers, CSB Bank and Dodla Diary from the BSE Smallcap index hit their respective 52-week highs in intra-day trade on Tuesday.
Meanwhile, Force Motors, SML Isuzu, Sterlite Technologies, Suven Life Sciences, Lumax Auto Technologies, Gabriel India, Cupid, Banco Products and Camlin Fine Sciences from the index have seen their market values more than double from their April 7, 2025, levels. The other 200 stocks have appreciated between 40 per cent and 98 per cent.
What's driving the rally?
The recent correction in small caps presents a compelling entry point for long-term investors. Even though over 80 per cent of small-cap companies have posted strong profit growth of 38 per cent and solid return ratios, most of them are still trading 15-45 per cent below their 52-week highs. This recent market correction has opened up a clear gap between the true value of these companies and their current market prices.
Coupled with structural tailwinds such as the 'Make in India' push, rising formalisation, and digital transformation across sectors, small caps are well-positioned to benefit disproportionately in the next growth cycle, making this an attractive investment opportunity, according to Bajaj Finserv AMC.
On June 25, 2025, Bajaj Finserv AMC announced the launch of Bajaj Finserv Small Cap Fund, an open-ended equity scheme predominantly investing in small-cap stocks that offers quality, growth and value. The fund opened for subscription on June 27, 2025, and closed on July 11, 2025.
Meanwhile, the first half of the last fiscal (FY25) saw significant upside, markets corrected sharply in the second half, with the Nifty 50 falling by 13 per cent from its peak in September 2024, led by mid-cap and small-cap underperformance, weak earnings, and foreign capital outflows. Despite the correction, long-term fundamentals remain intact, supported by structural reforms, rising retail participation, and improving valuations.
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