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Adobe Stock
Small-cap stocks are learning a hard lesson: gravity works. And that nothing goes up forever. Once the stars of a liquidity-fueled rally, they are now getting some serious drubbing. Serious because it's only slightly less bad than the pummelling seen during Covid. The BSE SmallCap has plunged 23 per cent, its worst six-month stretch in history, after the 27 per cent drop in March 2020. The pessimists say the worst might not be over yet. But there's a catch, a good one, for those who know that corrections should be used as stress tests for separating winners from the losers. After all, even within this bloodbath, not all small caps have bled equally. High-quality small caps with underlying fundamental strength have, in fact, held up better. And history suggests they will likely rebound stronger. All you have to do is find them, sit back and wait as they work their way back to the top. The good news is we have done the work for you. But first, let us give you some evidence of why quality works as a reliable compass during a market purge.
This article was originally published on April 01, 2025.
