Small-Cap Index Spent 36% of Trading Days More Than 30% Below Peak Since 2004

Key Takeaways

• The Nifty Smallcap 100 traded more than 30% below its previous peak on 36% of trading days since January 2004.
• The index was over 10% below its peak on 63% of trading days, compared with 47% for the Nifty Midcap 100 and 33% for the Sensex.
• The figures measure index drawdowns and should not be interpreted as returns delivered by individual small-cap mutual fund schemes.

Small-cap equities have spent a considerably larger share of the past two decades below previous market highs than large- and mid-cap stocks, according to data highlighted in FundsIndia's October 2026 Wealth Conversations report.

Between January 2004 and September 2026, the Nifty Smallcap 100 traded more than 30% below its previous peak on 36% of trading days. The corresponding proportion was 10% for the Nifty Midcap 100 and just 4% for the Sensex.

The difference remains wide even at shallower drawdown levels. The small-cap index was more than 10% below its earlier high on 63% of trading days. The figure stood at 47% for mid-caps and 33% for the Sensex.

For drawdowns exceeding 20%, small-caps spent 45% of trading days below their previous peak, compared with 28% for the Nifty Midcap 100 and 11% for the Sensex.

These percentages do not mean investors experienced a fresh crash on that many trading days. A market index can remain below an earlier high for months or even years after a single correction, causing multiple trading sessions to be counted as part of the same drawdown period.

Intra-Year Corrections Have Also Been Frequent

The historical record shows that small-cap volatility has occurred across several market cycles.

From 2004 to 2025, the Nifty Smallcap 100 recorded an intra-year decline of at least 10% in 21 of 22 calendar years. Its maximum intra-year fall reached 76% in 2008, while the index saw drawdowns of 47% in 2020 and 40% in 2018.

The index also registered intra-year declines of 33% in 2022 and 23% in 2025. At the same time, it finished roughly two-thirds of the years in the dataset with positive calendar-year returns, showing that a sharp correction during a year does not automatically translate into a negative full-year return.

For mutual fund investors, the data provides context for the underlying market in which small-cap schemes operate. Individual funds can differ materially because of portfolio selection, cash holdings, sector exposure and fund-manager decisions.

The study therefore illustrates historical small-cap market volatility rather than the performance of any particular mutual fund. Past index behaviour also does not indicate how small-cap equities or mutual funds will perform in future periods.