Fall from Grace: 22 Multibagger SmallCap Stocks Crash Up to 43% in a Month Amid Selloff
22 Multibagger SmallCap: The once high-flying small-cap stocks, which seemed unstoppable in their rally, are now facing a brutal selloff. Investors who chased these stocks for their multi-fold returns are now witnessing steep corrections as valuation concerns and weak December quarter earnings take center stage. Over the past month, 22 small-cap stocks have nosedived between 20% and 43%, wiping out significant wealth from investors’ portfolios.
Small-Cap Selloff: What Triggered the Crash?
The sharp fall in small-cap stocks, which initially began as profit booking in October, has escalated into a broader market correction. Several factors have contributed to the ongoing bloodbath in small caps:
- Weak Q3 Earnings: Many small-cap firms failed to meet Street expectations in the December quarter, leading to a wave of downgrades by analysts.
- Overheated Valuations: Despite delivering stellar returns in the past few years, many small caps were trading at stretched valuations, making them vulnerable to corrections.
- FPI Selloff: Foreign Portfolio Investors (FPIs) have been aggressively offloading shares in 2025, shifting their focus to large-cap stocks and safe-haven assets amid global economic uncertainty.
- Geopolitical Tensions: Rising trade tensions between global economic superpowers have dampened investor sentiment, prompting a flight from riskier assets.
- Lower Capex Allocation in Budget 2025: The Union Budget’s reduced focus on capital expenditure has negatively impacted capital goods and infrastructure-related stocks.
Biggest Losers: Small-Cap Stocks in Freefall
Several small-cap stocks, which had previously delivered multibagger returns, have now suffered steep declines. Here’s a look at the worst-hit stocks:
| Stock Name | Correction in One Month |
|---|---|
| Newgen Software | 43.28% |
| Kaynes Technology India | 38.98% |
| Apar Industries | 37.00% |
| Netweb Technologies | 36.52% |
| Jupiter Wagons | 36.00% |
| Sterling and Wilson Renewable Energy | 32.82% |
| Anant Raj | 32.00% |
| Ramkrishna Forgings | 30.00% |
| Motilal Oswal Financial Services | 28.50% |
| India Cements | 27.42% |
| Techno Electric & Engineering | 26.77% |
| Swan Energy | 26.25% |
| Praj Industries | 26.00% |
| Tejas Networks | 25.44% |
| Sonata Software | 22.77% |
| BEML | 22.46% |
| Data Patterns India | 22.00% |
| Triveni Turbine | 22.00% |
| Titagarh Rail Systems | 21.40% |
| NCC | 20.63% |
| Welspun Living | 20.55% |
| Elecon Engineering | 20.52% |
Sectoral Impact: IT, Railways, and Capital Goods Hit Hard
- IT Stocks Crumble: Small-cap IT stocks like Newgen Software, Netweb Technologies, and Sonata Software have suffered heavy losses, falling between 22% and 43% in a month.
- Railway Stocks Derail: Railway-related stocks, including Jupiter Wagons, Ramkrishna Forgings, and Titagarh Rail Systems, have plunged by up to 36%.
- Capital Goods Under Pressure: Stocks such as BEML, Triveni Turbine, and Elecon Engineering have also witnessed steep declines following a lower-than-expected capex allocation in the Union Budget 2025.
Expert Take: What’s Next for Small-Cap Stocks?
Market experts believe that while large-cap stocks have relatively outperformed, mid and small caps are still trading at expensive valuations.
Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated, “The ongoing correction highlights the stretched valuations of mid and small caps. The Nifty Midcap and Smallcap indices are down 8.6% and 11.3% YTD, while the Nifty is down only 1.52%.”
He further added, “FIIs will turn buyers again in India, but only when the dollar index weakens. Until then, investors should focus on quality large caps in banking, IT, autos, pharma, and capital goods and wait patiently for a turnaround.”
Final Thoughts: Should You Buy the Dip?
While the sharp correction in small-cap stocks has created buying opportunities, investors should be cautious. Stocks that were once market darlings have fallen due to fundamental concerns, and not every dip is worth buying. Analysts recommend focusing on fundamentally strong large-cap stocks that offer stability amid market turbulence.
As volatility persists, investors should tread carefully, avoiding overvalued stocks and prioritizing companies with strong earnings growth, solid balance sheets, and sustainable business models.
For more market insights, follow our blog.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like ET, NSE India.
Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.