Microcaps outshine in 10-year wealth creation
Large cap
The large-cap universe, comprising the top 100 companies by market capitalisation, has traditionally been viewed as resilient during periods of market volatility. However, recent corrections have shown that this segment has not provided the defensive cushion investors typically expect. Even companies with strong fundamentals were not spared, as global uncertainties, modest earnings growth, profit-taking, and a broad risk-off sentiment weighed heavily on performance.
Mid cap
Midcaps, which include companies ranked 101 to 250 by market capitalisation, have demonstrated stronger resilience compared to large-caps. Despite the prevailing cautious mood, investors continue to show selective interest in growth-oriented businesses within this segment. This resilience underscores the appeal of midcaps as a balance between stability and growth.
Small cap
Stocks ranked 251 onward fall into the small-cap universe. Profit booking and valuation de-rating affected the segment’s performance. The performance also reflects heightened caution among investors, as they move away from higher-risk segments during uncertain conditions. While smallcaps can deliver strong returns in favorable markets, they remain vulnerable to corrections and shifts in sentiment.
Micro cap
The microcap index, which includes the top 250 companies beyond the Nifty 500 constituents, has declined by 16.3%, making it the worst-performing segment in 2026. The sell-off in the segment has intensified due to geopolitical instability and high oil prices. The decline underscores the inherent volatility of microcaps and their tendency to suffer the steepest drawdowns during market corrections.
Long-term performance
Over the long run, microcaps have delivered the strongest returns, followed closely by midcaps. Both segments have significantly outpaced the broader market, fuelled by India’s structural growth and the rise of mid-sized firms into industry leaders.
Smallcaps have also generated solid returns, though slightly below midcaps. Large caps, while lagging in performance, continue to offer stability.
*2026 data is YTD based on 30 March 2026 closing values. Other years’ returns are calculated between the first and the last trading day closing values. 10-year return is compounded average return. Indices considered: Large cap: Nifty-50 TRI, Mid cap: Nifty Midcap 150 – TRI, Micro cap: Nifty Microcap 250 – TRI, Small cap: Nifty Small cap 250 – TRI. Source: ACE MF.
