Small-cap stocks extend rally to 4th straight session; MCX, NBCC, IndiaMART rise up to 6%

June 25, 2025 | Mumbai

Small-cap stocks in India continued their upward march for the fourth straight session on Tuesday, buoyed by sustained investor appetite, optimism in mid-tier corporate earnings, and strong domestic institutional flows. Shares of companies like Multi Commodity Exchange (MCX), NBCC (India) Ltd, and IndiaMART InterMESH Ltd led the gains, rising as much as 6% during the trading session.

Broad-Based Rally in the Small-Cap Space

The Nifty Smallcap 100 index ended the day up by 1.1%, extending its weekly gain to nearly 4% so far. Market breadth on the small-cap counter remained positive, with over 70% of constituents ending in the green.

Among notable gainers:

• MCX surged 6.1% to ₹3,580, driven by strong trading volumes and positive commentary on its recently launched trading platform.

• NBCC climbed 5.8% to ₹76.50 amid fresh order inflows and buzz around government’s renewed infrastructure push.

• IndiaMART rose 4.9% to ₹2,650 after brokerage upgrades and optimism around its expanding B2B digital services vertical.

Other prominent names such as BSE Ltd, KPI Green, and Siyaram Silk Mills also posted healthy intraday gains between 3% to 5%.

What’s Fueling the Momentum?

Analysts attribute the persistent rally to a confluence of factors including:

1. Improving Macro Fundamentals: India’s resilient GDP growth, falling inflation, and expectations of monetary easing later in the year are creating a favorable investment climate.

2. Strong Retail and DII Participation: With FIIs turning selective and large-cap valuations getting stretched, domestic investors are turning to the broader market for alpha generation.

3. Sectoral Tailwinds: Segments like infrastructure, power, commodities, and digitization are witnessing targeted policy support and private capex revival, benefiting small-cap participants.

"This is a classic post-election broad market catch-up rally," said Rachit Suri, Head of Research at CapitalArch. "As large-cap valuations stabilize, investors are rediscovering value in quality small-cap stocks, especially those with robust earnings visibility and low debt."

MCX Gains on Platform Upgrade and Volume Growth

MCX shares saw renewed investor interest following reports of higher derivatives trading volume and efficiency improvement from its new technology platform rollout.

"The exchange's upgraded systems are now operating seamlessly, leading to lower latency and higher trader satisfaction. We expect volume growth to remain strong in FY26," said Vivek Mohan, an analyst at Quantum Securities.

MCX has already reported a 25% YoY growth in options turnover for Q1 FY26 and is expected to benefit from increasing retail participation in commodities trading.

NBCC Rides Infrastructure Push

NBCC’s rally comes on the back of an ₹820 crore new project win from a government housing board. With the Modi 3.0 government emphasizing on urban renewal and smart cities, companies like NBCC are expected to see an uptick in project allocations.

"NBCC is uniquely positioned as a government-backed player with execution capabilities. Its order book visibility is improving, and we could see margin expansion in coming quarters," said Priya Malhotra, VP - Research, Apex Equities.

IndiaMART Rises on Digital Expansion and Upgrade Hopes

IndiaMART’s performance has improved with better monetization of its SaaS-led services. Recent analyst upgrades by domestic brokerages have also boosted sentiment.

"The company is refocusing on its core B2B model while adding value-added services like lead management and payments. If macro tailwinds continue, this could be one of the best compounding bets in the digital SME ecosystem," said Anshul Verma, Equity Strategist at Bristlewood Capital.

Risks Remain – Valuations, Liquidity, and Global Uncertainty

Despite the rally, market watchers caution that not all small-cap stocks may sustain gains.

"While the overall trend is positive, pockets of froth are emerging. Investors should be wary of low-quality names that are rising purely on momentum without earnings support," warned Namita Rao, Fund Manager at StarAlpha MF.

Additionally, any reversal in global risk appetite or a surge in crude oil prices could dampen sentiment.

Market Context: Sectoral and Technical Overview

The rally in small caps coincided with relative underperformance in the large-cap Nifty 50 index, which ended flat amid mixed global cues. Sectorally, realty, capital goods, and industrials led the charge in the broader market.

Technical analysts suggest that the Nifty Smallcap index is approaching overbought territory, with an RSI of 76. However, they note that strong support is seen near the 11,600–11,700 zone.

Investor Outlook: Opportunities with Caution

Investors are advised to stay selective and focus on companies with:

• Strong balance sheets

• Earnings visibility

• High promoter holding

• Scalable business models

"India’s structural growth story is intact. Smart investors will look for leaders in niche segments within the small-cap universe," concluded Rachit Suri of CapitalArch.

While the current rally offers short-term gains, long-term wealth creation will depend on careful stock selection and disciplined investing.