💥Smallcap 250 is holding strongly near its highs while Nifty 50 continues to fall.
Now, many so-called market experts have started predicting a market crash because of high crude oil prices and elevated US bond yields.
But I look at the market differently.
The real problem with Nifty 50 is weak earnings growth.Nifty 50 is under serious selling pressure because some of its biggest constituents—HDFC Bank, Reliance Industries, TCS, Infosys and other large companies—have been continuously underperforming.
These companies carry significant weight in the Nifty 50. When they continue to underperform, they naturally put pressure on the entire index.
The important question is:
If the biggest companies in the index are not performing, which other large companies can pull Nifty 50 higher?
This is why I don't expect any meaningful relief in Nifty 50 until the earnings outlook of these large companies improves.
FIIs are not selling much this month, yet large-cap stocks continue to underperform.
This tells us something important.
It appears that DII and retail money are increasingly looking beyond traditional large-cap stocks because earnings growth in many large-cap companies remains in the single digits, while smallcap index several emerging sectors companies are showing much stronger future earnings potential.
Look at the Smallcap 250 Index.
Even though Nifty 50 has corrected from around 24,600 to 23,400 in just one month, the Smallcap 250 Index is still holding strongly near its highs.
This is a very important signal.
It shows that the market is not selling everything indiscriminately.
Money is moving selectively toward sectors and companies where investors can see strong future earnings growth.
Even within smallcaps, Buying is concentrated in selected pockets where the future growth opportunity is strong.
This is exactly what I warned about
In my YouTube videos, I repeatedly warned that 2026 would not be the year to make strong returns simply by investing in large-cap stocks.
So far, that view has played out.
The market is increasingly becoming a stock-picker's market.
Companies operating in high-growth areas—such as AI, data centres, power transmission, pharma, precision engineering and other emerging sectors—can continue to deliver strong returns when their earnings growth supports the valuations.
Why are so many investors frustrated?
Because many investors are still holding the same underperforming sectors that were popular during the 2023–24 bull market.
IT, banking, railways, solar and several other popular themes have struggled to deliver the kind of returns investors expected.
Simply buying stocks that performed well in the previous bull market does not guarantee returns in the next phase of the market.
The market regime has changed. Similarly u need to change your strategies based on market conditions.
My conclusion:
I do not see any market crash.
Yes, Nifty 50 can continue to underperform if the earnings growth of its major constituents remains weak.
High crude prices and US bond yields are important risks, but in my view, they are not the primary reason for the persistent underperformance of Nifty 50. Because nifty50 is underperforming since many months.
That is why Smallcap 250 can remain resilient even when Nifty 50 is falling.
This is not a market where you can randomly buy stocks and expect returns like 2023–24.
This is a stock-picker's market. 💥💥