From the ashes of bear-market: Over 125 smallcap stocks soar up to 300% from 52-week lows

Smallcap stocks, which were among the worst hit during last year's market correction and the weak start to 2026, have staged a sharp comeback, with several names more than doubling from their 52-week lows. The Nifty Smallcap 250 index is now up 11% so far this year, marking a strong recovery from the bear-market phase that gripped the broader market earlier. Nearly half of the stocks in the index have jumped 30% or more from their 52-week lows, while only about 10 stocks are still trading near their lows.

The rebound shows that investors have returned to smaller companies after a painful correction. At the start of the year, the damage in the broader market was deep. Among listed companies with a market cap of more than Rs 1,000 crore, over 64% had fallen 30% or more from their all-time highs. Nearly 78% had fallen at least 20%, showing that a large part of the market had already slipped into bear-market territory.

20 stocks double

The recovery has been sharpest in select smallcap names. Twenty stocks from the Nifty Smallcap 250 universe have turned multibaggers from their 52-week lows, rising 100% or more. HFCL tops the list, rallying 316% from its 52-week low of Rs 59.82 touched in January this year. Ather Energy is next, rising 286% from its 52-week low of Rs 445.3


Welspun Corp, Aditya Infotech has risen 197% from Rs 1,200.80 to Rs 3,566. RR Kabel has advanced 150% from its low, while Kirloskar Oil Engines is up 145%. Cemindia Projects, Acutaas Chemicals and Netweb Technologies India have gained 144%, 143% and 136%, respectively, from their 52-week lows.

Other stocks that have doubled include Hindustan Copper, Syrma SGS Technology, Aegis Logistics, Schneider Electric Infrastructure, Chennai Petroleum Corporation, Data Patterns, Prime Focus, Acme Solar Holdings, Jindal Saw, Sona BLW Precision Forgings and Neuland Laboratories.

The gains have not come from one sector alone. The list has names from telecom infrastructure, electric vehicles, cables, capital goods, chemicals, metals, logistics among others, highlighting that the rally has been spread across themes rather than being limited to one pocket of the market.

Earnings support the rally

The small-cap rebound is not entirely driven by liquidity or risk appetite. Earnings have also improved. During the latest quarter, midcap earnings grew faster than largecap earnings, while smallcap earnings grew faster than midcap earnings. This has helped investors look beyond the correction and return to companies where growth remains visible.

Also Read: Sugar rush on Dalal Street: Stocks soar up to 59% in August, but are valuations turning risky?

Smallcap companies covered by Motilal Oswal delivered 31% year-on-year earnings growth in the June quarter, ahead of the brokerage’s 22% estimate. Around 75% of the smallcap coverage universe met or exceeded expectations.

Financials and oil and gas led the earnings performance, while NBFC lenders, private banks, NBFC non-lenders and chemicals also contributed. Together, these sectors accounted for about 69% of the incremental year-on-year rise in smallcap earnings.

The forward earnings picture also favours smaller companies. FY27 profit growth is estimated at about 16% for the Nifty 100, 20% for midcaps and 34% for smallcaps, according to Venugopal Manghat, chief investment officer-equity at HSBC Mutual Fund.

Rajat Rajgarhia, Managing Director and CEO–Institutional Equities at Motilal Oswal, said the market should not be seen only through the lens of company size. "In my view, this is not a market of largecaps, midcaps and smallcaps. It is a market of growth and no growth," he said.

"As a general principle -- and this is only my view -- if a company’s earnings cannot compound at more than 15% over a three-to-four-year period, no valuation necessarily makes it attractive. Investors enter equities for growth. There is no scientific basis for the precise threshold; I am simply using 15% as the bear-case growth rate that investors should seek in India," Rajgarhia said.

He said investors are willing to value faster-growing smaller companies at a premium. "If the market offers companies capable of compounding earnings at 25%, 30% or 40%, as we are seeing among several small- and mid-cap companies, investors will tend to value them at a premium to large caps. That is what is currently happening," he said.

Flows follow returns

The recovery has also been helped by continued interest in smallcap and midcap funds. Investors tend to follow past returns, and the strong three-year performance of smaller companies has kept money flowing into the category.

"Investors almost always chase recent returns," said Shridatta Bhandwaldar, chief investment officer-equities at Canara Robeco AMC. "Small and mid-caps have sizably outperformed large caps over the last 3 years and thus those categories have been receiving larger flows."

The strong bounce, however, also brings risk. Many smallcap stocks have already moved far above their lows. If earnings fail to support valuations, the same stocks can correct quickly.

Data: Ritesh Presswala

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