71% of Nifty Smallcap Stocks Trade Below 200-DMA; Index on Verge of Sharpest Weekly Fall in Nearly 4 Years

Indian equity benchmark indices, the Nifty 50 and Sensex, were on course to extend their losing streak for the fourth consecutive session on Friday. The Nifty 50 was trading lower by over 1 per cent, while the Sensex declined 0.72 per cent. However, the selling pressure was more severe in the broader markets, where midcap and smallcap stocks witnessed sharper declines.

The Nifty Midcap 100 and Nifty Smallcap 100 indices were down 2.70 per cent and 3.36 per cent, respectively, indicating that the weakness was sharper than the frontline indices.

Nifty Smallcap on Verge of Recording Sharpest Weekly Fall in Nearly Four Years

The Nifty Smallcap 100 index has come under sustained selling pressure, slipping below its crucial 200-DMA and touching a fresh five-month low. The index has declined nearly 7.73 per cent so far this week, on verge of recording its sharpest weekly fall since December 2022, or in nearly four years.

The recent correction has also erased a significant portion of the gains recorded earlier this year and it has turned negative on YTD basis. The index is now down nearly 13 per cent from its all-time high registered in September 2026.

Nifty Smallcap 100 RSI Falls to Lowest Level Since May 2022

The sharp decline has pushed the Nifty Smallcap 100 index into oversold territory on the daily charts. Its 14-period Relative Strength Index (RSI) has slipped to around 22, its lowest level since May 2022 and the weakest reading in more than four years.

An RSI reading below 30 is generally considered oversold, suggesting that selling pressure has been particularly intense.

71% of the Nifty Smallcap Stocks Trade Below Their 200-DMA

The weakness is also evident in the number of index constituents trading below their long-term moving averages. Of the 100 stocks in the Nifty Smallcap 100 index, as many as 71 were trading below their respective 200-DMAs.

In comparison, only 37 stocks were trading below this key moving average in September, when the index registered its all-time high.

The increase from 37 to 71 stocks indicates how significantly market breadth has deteriorated over the past month. With nearly three-fourths of the index constituents now trading below their 200-DMAs, the selling pressure is no longer confined to a handful of stocks but has spread across a large part of the smallcap universe.

Disclaimer: The article is for informational purposes only and not investment advice.