Experts suggest selective approach in 2026 as smallcap valuations still sky high despite 2025 correction

Stock markets in India, which had seen a multi-year rally since the pandemic-era crash in March 2020, cooled in 2025. For investors, especially in smallcaps, who were banking on markets continuing to deliver outsized returns, the year has been a reality check. Year-to-date, the BSE Sensex is still up 8 per cent. However, the smallcap index has declined around 8 per cent, following a massive 500 per cent surge between April 2020 and October 2024, compared to the Sensex’s 200 per cent gains in the same period. Even as India’s economic growth was strong, sustained pullout from stocks by foreign…