Small caps bear the brunt of correction in February 2025

6 Mar 2025 , 10:11 AM

SMALL CAPS – IF JANUARY WAS BAD, THEN FEBRUARY WAS WORSE

The small caps have had a forgettable year in 2025 so far. After losing -10.81% in January 2025, the small cap index lost another -11.13% in February 2025. So, the small cap index has lost a full 21% in just the first two months of 2025. There have been several reasons for the sharp sell-off. Small caps are most vulnerable to static business models as well as to a financial crunch in the market. Also, high inflation and a weak rupee are known to hit the small cap players the most. Let us start with small cap stocks in February 2025 from the perspective of momentum?

SMALL CAP MOMENTUM FADES IN FEBRUARY 2025

In terms of 1-month returns, the Nifty Small cap 100 lost -11.13%. Out of the 94 eligible stocks in the index, only 9 stocks gave positive returns, while 85 stocks gave negative returns in the month of February 2025. Here are the top-15.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
CASTROLIND	213.05	21.16%	2.03%	284.40	162.60	31.03%	25.09%
NH	1,440.55	10.84%	7.64%	1,514.70	1,080.00	33.38%	4.90%
REDINGTON	225.20	8.76%	8.50%	263.89	158.61	41.98%	14.66%
CHAMBLFERT	535.00	8.73%	52.03%	579.00	332.05	61.12%	7.60%
BLUESTARCO	1,938.95	4.93%	50.97%	2,417.00	1,222.40	58.62%	19.78%
FIVESTAR	753.10	2.67%	7.82%	943.75	600.05	25.51%	20.20%
MANAPPURAM	200.13	0.78%	14.05%	230.40	138.35	44.65%	13.14%
NAVINFLUOR	3,774.75	0.59%	24.53%	4,299.05	2,875.95	31.25%	12.20%
RBLBANK	158.27	0.29%	-39.14%	277.25	146.10	8.33%	42.91%
J&KBANK	94.55	-0.04%	-33.78%	149.70	86.61	9.17%	36.84%
FSL	344.20	-0.14%	68.21%	422.30	176.25	95.29%	18.49%
AAVAS	1,685.65	-0.25%	15.85%	1,978.95	1,307.00	28.97%	14.82%
HAPPSTMNDS	683.00	-1.48%	-18.97%	956.00	654.85	4.30%	28.56%
MGL	1,234.60	-2.34%	-16.63%	1,988.00	1,075.25	14.82%	37.90%
360ONE	998.75	-2.92%	38.86%	1,318.00	647.00	54.37%	24.22%

Data Source: NSE

In Feb-25, only 2 stocks gave double digit returns (Castrol India and Narayana Hrudayalaya). In terms of sectoral mix; the top-15 had 6 BFSI stocks, 3 new age technology plays, and 3 specialty chemical plays. The worst performers in February 2025 by monthly returns were JBMA, Natco Pharma, Sonata Software, Data Patterns, BEML, IRCON and Swan Energy.

DID SMALL CAPS DELIVER ON 1-YEAR RETURNS?

For the 94 small cap stocks with full data, the average 1-year return was -7.99%. A total of 30 stocks gave positive 1-year returns, while 64 stocks delivered negative returns for Feb-25. Here is the top-15 on 1-year returns.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
FSL	344.20	-0.14%	68.21%	422.30	176.25	95.29%	18.49%
GRSE	1,257.00	-18.30%	54.35%	2,833.80	673.45	86.65%	55.64%
AMBER	5,630.00	-14.53%	52.84%	8,177.00	2,992.50	88.14%	31.15%
CHAMBLFERT	535.00	8.73%	52.03%	579.00	332.05	61.12%	7.60%
BLUESTARCO	1,938.95	4.93%	50.97%	2,417.00	1,222.40	58.62%	19.78%
PPLPHARMA	191.00	-20.65%	43.97%	307.90	114.35	67.03%	37.97%
KAYNES	4,165.50	-16.37%	40.21%	7,822.00	2,424.00	71.84%	46.75%
360ONE	998.75	-2.92%	38.86%	1,318.00	647.00	54.37%	24.22%
GLENMARK	1,284.15	-12.01%	38.25%	1,830.95	883.00	45.43%	29.86%
ZENSARTECH	737.85	-13.17%	34.36%	984.95	515.00	43.27%	25.09%
MCX	4,981.50	-12.46%	32.62%	7,048.60	2,917.85	70.73%	29.33%
RADICO	2,049.20	-3.77%	32.06%	2,637.70	1,429.85	43.32%	22.31%
LAURUSLABS	525.60	-3.05%	29.84%	646.20	373.10	40.87%	18.66%
AFFLE	1,400.85	-6.77%	25.23%	1,884.00	998.20	40.34%	25.64%
NAVINFLUOR	3,774.75	0.59%	24.53%	4,299.05	2,875.95	31.25%	12.20%

Data Source: NSE

On a yoy basis, the leaders were dominated by a mix of 3 Healthcare plays (Piramal Pharma, Glenmark, and Laurus Labs), 3 new-age tech companies (FSL, Zensar, and Affle), and 2 EMS companies (Kaynes, Amber). The remaining stocks in the above list, were largely spread out across sectors with financial inclusion also emerging as a potent theme in last 1 year.

HOW RESILIENT WERE SMALL CAPS IN LAST ONE YEAR?

In terms of bounce from lows, small caps bounced just 4.37%. Total of 5 stocks bounced over 70% from the lows, while 33 jumped over 20%. Top-15 average bounce was 60.89%.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
FSL	344.20	-0.14%	68.21%	422.30	176.25	95.29%	18.49%
AMBER	5,630.00	-14.53%	52.84%	8,177.00	2,992.50	88.14%	31.15%
GRSE	1,257.00	-18.30%	54.35%	2,833.80	673.45	86.65%	55.64%
KAYNES	4,165.50	-16.37%	40.21%	7,822.00	2,424.00	71.84%	46.75%
MCX	4,981.50	-12.46%	32.62%	7,048.60	2,917.85	70.73%	29.33%
PPLPHARMA	191.00	-20.65%	43.97%	307.90	114.35	67.03%	37.97%
CHAMBLFERT	535.00	8.73%	52.03%	579.00	332.05	61.12%	7.60%
BLUESTARCO	1,938.95	4.93%	50.97%	2,417.00	1,222.40	58.62%	19.78%
360ONE	998.75	-2.92%	38.86%	1,318.00	647.00	54.37%	24.22%
GLENMARK	1,284.15	-12.01%	38.25%	1,830.95	883.00	45.43%	29.86%
MANAPPURAM	200.13	0.78%	14.05%	230.40	138.35	44.65%	13.14%
RADICO	2,049.20	-3.77%	32.06%	2,637.70	1,429.85	43.32%	22.31%
ZENSARTECH	737.85	-13.17%	34.36%	984.95	515.00	43.27%	25.09%
REDINGTON	225.20	8.76%	8.50%	263.89	158.61	41.98%	14.66%
INOXWIND	150.89	-7.00%	-75.08%	261.90	107.06	40.94%	42.39%

Data Source: NSE

On resilience score, the list was once again dominated by new-age IT stocks (FSL, Zensar, and Redington). The other key sector representations in the top-15 were Financial Inclusion (MCX, 360 One, and Manappuram); EMS (Amber and Kaynes); and Healthcare (Piramal Pharma and Glenmark). The remaining stocks were largely spread out and roughly mirrored the 1-year return rankings list. The list at the bottom included stocks like; BEML, Signature Global, Chennai Petro, Hindustan Copper, Birlasoft etc.

HOW SMALL CAPS FARED ON THE SWING FACTOR?

In terms of proximity to the peak, the small cap index was 25.44% short of the peak. Just 2 stocks are less than 10% to the peak while 71 stocks are over 30% off the peak.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
NH	1,440.55	10.84%	7.64%	1,514.70	1,080.00	33.38%	4.90%
CHAMBLFERT	535.00	8.73%	52.03%	579.00	332.05	61.12%	7.60%
NAVINFLUOR	3,774.75	0.59%	24.53%	4,299.05	2,875.95	31.25%	12.20%
MANAPPURAM	200.13	0.78%	14.05%	230.40	138.35	44.65%	13.14%
REDINGTON	225.20	8.76%	8.50%	263.89	158.61	41.98%	14.66%
AAVAS	1,685.65	-0.25%	15.85%	1,978.95	1,307.00	28.97%	14.82%
FSL	344.20	-0.14%	68.21%	422.30	176.25	95.29%	18.49%
LAURUSLABS	525.60	-3.05%	29.84%	646.20	373.10	40.87%	18.66%
KARURVYSYA	199.50	-11.90%	9.54%	246.00	164.10	21.57%	18.90%
BLUESTARCO	1,938.95	4.93%	50.97%	2,417.00	1,222.40	58.62%	19.78%
FIVESTAR	753.10	2.67%	7.82%	943.75	600.05	25.51%	20.20%
RAMCOCEM	832.95	-10.49%	-0.75%	1,060.00	700.00	18.99%	21.42%
RADICO	2,049.20	-3.77%	32.06%	2,637.70	1,429.85	43.32%	22.31%
360ONE	998.75	-2.92%	38.86%	1,318.00	647.00	54.37%	24.22%
BATAINDIA	1,224.00	-3.36%	-13.37%	1,633.00	1,213.80	0.84%	25.05%

Data Source: NSE

In terms of proximity to the peak, the list is dominated by Financial Inclusion Plays (Manappuram, Aavas, Karur Vysya, Five Star, and 360 One); healthcare (Narayana Hrudayalaya and Laurus Labs); and specialty chemicals (Chambal and Navin Fluorine. Companies farthest from the peak were a mixed bag of stocks like SW Solar, Chennai Petro, Titagarh Wagons, JWL, Data Patterns, Tanla, and IRCON. However, the overpowering theme is that the swing factor for small cap companies has largely deteriorated in February 2025; although select themes like chemicals and financial inclusion are standing out.