Small Caps Outperform Nifty 50 by 24 Percentage Points in February–September 2026

Key Takeaways:

• The Nifty Smallcap 250 TRI gained 15.95% between February and September 2026. 
• The Nifty 50 TRI declined 8.08% over the same period, leaving a performance gap of more than 24 percentage points. 
• Historical data since 2020 also shows that small caps experienced deeper losses than large caps during major market corrections. 

Small-cap stocks outperformed large caps sharply between February and September 2026, but historical market-cycle data also shows that the segment has suffered larger drawdowns during corrections. 

The Nifty Smallcap 250 Total Return Index gained 15.95% between February and September 2026, while the Nifty 50 TRI declined 8.08% over the same period. 

The gap amounted to slightly more than 24 percentage points, based on an Edelweiss Mutual Fund analysis using AceMF data through September 30, 2026. 

The latest period was not the first time small caps substantially outperformed. 

Between June 2023 and September 2024, the Nifty Smallcap 250 TRI gained 86.08%, compared with a 41.96% rise in the Nifty 50 TRI. 

During the post-Covid recovery between June 2020 and January 2021, the small-cap index rose 69.01%, versus 39.68% for the Nifty 50. 

Small caps also gained 61.58% between February 2021 and May 2023, while the large-cap benchmark returned 33.53%. 

The pattern reversed during falling markets. 

During the February-May 2020 Covid-driven correction, the Smallcap 250 TRI lost 29.79%, compared with a 17.51% fall in the Nifty 50 TRI. 

Another sizeable gap appeared between October 2024 and February 2025. Small caps declined 25.17%, while the Nifty 50 lost 13.90%. 

The segment has also not led every market recovery. Between March 2025 and January 2026, the Nifty 50 TRI gained 15.67%, slightly ahead of the Smallcap 250 TRI's 14.43%. 

The figures concern market indices rather than the returns of individual small-cap mutual funds. Scheme returns can differ because of portfolio construction, cash holdings, expenses, stock selection and tracking differences where applicable. 

For mutual fund investors, the historical dataset primarily illustrates the difference in volatility between market-cap segments: periods of stronger small-cap performance have also been accompanied by periods of considerably deeper drawdowns.