Mid & Smallcap Stocks Plunge >2.5% in Dec; High Valuations & Profit Booking Hit

• Midcap and Smallcap indices saw significant declines in December.
• BSE Midcap fell 2.7% and BSE Smallcap dropped 2.8% in December.
• This is the largest monthly fall for the Midcap index since February 2025.
• The decline occurred despite improved earnings growth in Q2.
• Profit booking, high valuations, and unwinding of margin trading facilities contributed to the fall.

Why It Matters: Midcap and smallcap stock declines signal market shifts and investor risk.