Nifty Smallcap 250 surges 13.4% in April despite FII outflows, macro headwinds
Indian small-cap and micro-cap stocks delivered outsized returns in April 2025, with the Nifty Smallcap 250 index gaining 13.4% and the Nifty Microcap 250 surging 16.2%, even as geopolitical tensions, rising crude oil prices, and persistent foreign institutional investor outflows weighed on the broader macro environment, according to a report by OmniScience Capital released on Saturday, 2 May.
Key Market Movements in April
The rally was most pronounced at the smallest end of the market. OmniScience Capital's proprietary Bharat Vectors framework — which tracks approximately 1,500 investible companies — showed that the smallest market-cap segments significantly outperformed. A select basket of 250 stocks with an average market capitalisation of around ₹1,500 crore returned 25.2% during the month, while another basket of 250 stocks averaging around ₹3,000 crore in market cap returned 23.2%.
These figures stand in sharp contrast to the prevailing macro narrative, which was clouded by the US-Iran conflict, inflationary pressures, currency depreciation, and sustained FII selling.
What Drove the Rally
The report attributes the surge to a valuation re-rating rather than any sudden improvement in underlying business fundamentals. Return on equity (RoE), leverage levels, and growth expectations remained largely unchanged across market segments, indicating no material shift in corporate performance. Instead, price-to-earnings (P/E) and price-to-book (P/B) multiples expanded significantly, suggesting that markets are realigning valuations with existing fundamental strength following a prolonged period of caution.
Dr. Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital, offered a colourful explanation:
