Will Nifty Midcap and Smallcap indices rebound or face more pain? Here’s what technical charts signal | Stock Market News

After delivering robust returns over the past two years, mid-cap and small-cap stocks have faced sharp corrections in 2025, weighed down by global uncertainties and macroeconomic headwinds. A combination of relentless foreign institutional outflows, weak corporate earnings, and a weakening rupee has intensified the selling pressure.

Adding to investor concerns, U.S. President Donald Trump’s recent announcement of fresh tariffs has raised fears of a potential trade war, which could slow global economic growth and increase inflationary pressures. As a result, Indian equities, particularly the mid-cap and small-cap segments, have seen a steep decline this year.

Mid-cap and Small-cap Performance in 2025

The Nifty Midcap 100 index has significantly underperformed in 2025, dropping over 12 per cent compared to just a 3 per cent decline in the benchmark Nifty 50 index in the same period. The Nifty Smallcap 100 index experienced an even sharper decline, plunging over 16 per cent this year.

The sell-off has been particularly intense in February, with the Nifty Midcap 100 slipping another 5 per cent after losing 6 per cent in January. Meanwhile, the Nifty Smallcap 100 index has tumbled over 7 per cent in February, extending its 10 per cent fall from January.

In contrast, the Nifty 50 index has been relatively resilient, falling 2.5 per cent in February after a 0.6 per cent decline in January.

Market Outlook and Key Levels to Watch

According to Anand James, Chief Market Strategist at Geojit Financial Services, the market is at a critical juncture, with key resistance and support levels playing a crucial role.

“As feared, the upswings turned lower from the 23,060 vicinities, the level assumed to provide the first line of resistance. This renders the 22,800 region ever more vulnerable, but yesterday’s close does not indicate an outright collapse. We favor an ascent before a downside break unfolds, for the sake of momentum. While we retain 23150 as the upside objective, we remain cautious about an imminent drop aiming at 21800-21300, unless 23300 is conquered,” he stated.

Technical Outlook: Midcap 100 and Smallcap 100 Indices

Nifty Midcap 100 – Key Support and Resistance Levels

According to Om Mehra, Technical Analyst at SAMCO Securities, the Nifty Midcap 100 index has declined nearly 20 per cent from its all-time high of 60,925.95, reflecting a healthy correction. The index hit a low of 48,503.45 on Monday, and while the primary trend remains weak, a minor positive divergence on the daily chart could indicate a short-term relief rally.

Key support: 47,246.60 (last tested on June 4, 2024).

Key resistance: A sustained close above 51,600 could signal a potential rebound.

Bearish trigger: If the index breaches 48,500, it could indicate further downside risks.

Nifty Smallcap 100 – Correction and Trend Reversal Possibilities

The Nifty Smallcap 100 index, which touched 19,716.20 on December 12, 2024, has corrected 23.69 per cent in less than two months, reaching a low of 15,044.40 on Monday. The index continues to form lower lows and lower highs on both daily and weekly charts, confirming a downtrend.

Positive divergence: The daily RSI and oversold indicators hint at a potential relief rally.

Key resistance: A close above 17,000 is needed for a trend reversal.

Immediate support: 14,800, with stronger support at 14,000, which will be critical for further direction.

Cautious approach advised: Despite possible short-term gains, the broader trend remains weak.

Meanwhile, Trivesh D, COO at Tradejini, highlighted the impact of valuation concerns and liquidity constraints.

“The sharper declines in midcaps and smallcaps suggest signs of overvaluation, especially amid recent market volatility. Despite solid domestic investment flows, foreign institutional outflows are putting liquidity under pressure,” he noted.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.