Nifty Smallcap 250 hits 52-week high as Ola Electric, other stocks rally up to 7%. What lies ahead?

Broader markets gained sharply on Wednesday, with the Nifty Smallcap 250 index rising nearly 1% to hit a fresh 52-week high as analysts highlighted smallcap earnings’ outperformance and easing valuations.

The Nifty Smallcap 250 index rose to nearly 18,367, the highest level in nearly two years. The index is now close to its all-time high level of 18,688 which it had hit in September 2024. Nifty Smallcap 100 index also hit a fresh record high near 19,820.

Ola Electric shares were the top gainers on the index, jumping more than 7%. Go Digit, PNB Housing Finance, RR Kabel and Bata India shares jumped 5-6% to follow. HFCL, Sapphire Foods, TBO Tek, Gabriel India and Engineers India shares rose more than 4% each to be among the top gainers on the smallcap index.

Why are smallcap stocks rising?

Small-cap companies are emerging as the strongest performers relative to large- and mid-cap peers in the Q1 earnings season so far, Vinod Nair, Head of Research at Geojit Investments, recently said.

Analysts have also highlighted easing valuations after a sharp correction. With underperformance over the past period, Indian valuations have corrected and the country’s premium to emerging market equities is at a 10-year low, said Prateek Agrawal, MD & CEO of Motilal Oswal AMC. He noted that market valuations appear more aligned with historical trends.

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Technical view on smallcap index

Explaining the technical charts of the Nifty Smallcap 100 index, Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, noted that the smallcap index had been consolidating within the 19,470–18,596 range over the past six weeks. The index has now broken above the upper end of this range and has scaled a fresh record high.

“Technically, it continues to trade above its key short-term and long-term moving averages, reflecting a strong underlying trend. The DI+ has crossed above the DI- on the ADX indicator, signalling that buyers are firmly in control. Additionally, the MACD has crossed above its signal line, further reinforcing the bullish momentum,” Shah said.

The 19,450–19,400 zone is likely to act as an immediate support for the index, and it is expected to extend its uptrend as long as it holds above this zone, according to the analyst.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)