CIAN Agro Industries leads the pack with a 177% surge, followed by Indo Tech Transformers (156%) and Sigma Advanced Systems (121%). Ideaforge Technology is up 119%, Indiabulls Ltd 118%, and Sunflag Iron & Steel 115%. Sterlite Technologies (113%), BMW Industries (108%), HFCL (108%), and JTL Industries (100%) complete the roster of stocks that have at least doubled in FY27 so far.
The numbers behind the rally are not speculative froth but grounded in a genuine earnings beat cycle. Data from Motilal Oswal Financial Services’ coverage universe indicates that smallcaps (67 companies tracked) delivered earnings growth of 30% YoY, broadly in line with estimates of 33%. Midcaps punched harder with 45 companies in their coverage universe posted earnings growth of 29% YoY, decisively beating the brokerage’s own estimate of 22%.
Large-caps, meanwhile, grew earnings at 14% YoY. Critically, 84% of mid-cap companies in Motilal’s universe either exceeded or met estimates, against 76% for largecaps and 70% for smallcaps.Also Read | India Inc promoters pour crores to buy the dip in these 18 stocks. Did you sell too early?
Within the midcap universe, BFSI, technology, utilities, real estate, and oil & gas did the heavy lifting, together contributing approximately 87% of the incremental year-on-year earnings accretion. In the smallcap universe, the picture was more mixed as chemicals, cement, capital goods, technology, and non-lending NBFCs were a drag on the aggregate number but that aggregate masked powerful pockets of outperformance. Lending NBFCs, Private banks, automobiles, healthcare, and retail clocked impressive growth, together contributing roughly 129% of the incremental YoY earnings accretion in the smallcap space, meaning these sectors more than compensated for the laggards.
The pattern in stock price performance tracks this earnings map almost exactly: cables, transformers, defence electronics, steel, and telecom infrastructure are dominating the FY27 leaderboard — sectors sitting squarely in the domestic capex and infrastructure spending cycle, insulated from the global uncertainty weighing on export-facing large caps.
“The results in small and midcaps have been strong and have surprised investors,” Aashish P Somaiyaa, CEO of White Oak Capital Management, told ET Markets.
He attributes part of the move to investors who had written off the space after 18-24 months of tepid returns finally returning to bottom-up stock picking. “It’s not like we are seeing some big rally. It’s more bottom-up selective stock picking wherever the numbers are looking good. But by and large, the numbers for March for small and mid cap have been better than what people thought.”
Foreign portfolio investors, too, are leaning in, particularly into mid-cap names and select smallcaps with high growth potential that are delivering strong quarterly results.
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Rajesh Palviya, head of derivatives and technicals at Axis Securities, sees the momentum building. “The smallcap and midcap spaces are looking attractive and a lot of stocks have done well in the last couple of trading sessions. The way the broader market is showing signs of strength, this midcap index may continue to move further and stocks may attract more buying interest.” He argues that once Nifty clears the 24,400 level decisively, the tailwinds for smaller names will intensify. Among sectors, he flags sugar, real estate, and chemicals as showing notable strength.
The divergence between headline index performance and the broader market tells the real story. The Nifty’s 8% gain, while solid, is being dragged by its heavy weightage in banking and IT — two sectors navigating a period of earnings deceleration. “Coming to the index, because the index is heavy with two-three major sectors like banking and IT which are facing some kind of growth slowdown, that is reflecting in the overall index performance,” noted one market analyst tracking the divergence. “But on an overall market basis, the market is quite bullish, quite constructive, and is rightly rewarding companies who are reporting good numbers.”
For investors, selective opportunities continue to exist in mid and small caps where valuations remain reasonable relative to earnings visibility and domestic growth drivers like infrastructure spending and a nascent consumption recovery.
But this is not a tide lifting all boats. Stocks are being rewarded on results, order books and earnings growth visibility. Names that have surged 70%-plus in 25 sessions like Universal Cables, Apollo Micro Systems, MTAR Technologies, Aeroflex Industries, Man InfraConstruction share a common thread: credible earnings upgrades and exposure to government-backed capex pipelines.
For investors, therefore, waiting for Nifty to confirm the move before acting on smallcaps may mean arriving well after the feast.
(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)
