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Why India's Biggest Stocks Lost Market Share Since 2020
Jefferies says India's economy has held up well despite challenges.
But the biggest companies now make up a smaller share of the stock market than they did in 2020.
Smaller and medium-sized companies have done better than large companies this year, even though their shares are valued more highly.
That can help explain why the main stock-market indexes have been weak.
People in India are putting money into equity mutual funds, but companies are also issuing many new shares.
Jefferies says this new supply makes it harder for the Nifty to rise.
The report also points to strong lending to businesses and small firms.
It says those signs may mean companies are investing more.
Jefferies expects India's economy to grow 6.5–7% in real terms this fiscal year.
Jefferies says India's 20 largest stocks' share of total market capitalisation fell from 44% in 2020 to 27%.
Chris Wood says mid- and small-cap stocks have outperformed large caps this year despite higher valuations.
The Nifty MidCap 100 trades at 22.9 times forward earnings, versus 17.0 times for the Nifty, according to the report.
Strong domestic equity-fund inflows are being absorbed by increased share issuance, which Jefferies says limits the Nifty's upside.
Jefferies cites resilient credit growth and investment indicators, and forecasts real GDP growth of 6.5–7% this fiscal year.
- Who
- Jefferies and its Head of Equities, Chris Wood.
- What
- Jefferies says the top 20 stocks' share of India's market capitalisation has fallen, while small- and mid-cap stocks and the economy show strength.
- Where
- India.
- When
- The cited Asia Maxima report is dated 9 October 2026; the market figures cover periods including year-to-date 2026.
- Why
- The article attributes benchmark weakness partly to the declining weight of the largest stocks and equity issuance absorbing mutual-fund inflows.
Key facts
- Top 20 stocks' market-cap share
- Fell from 44% to 27% since 2020, according to Jefferies.
- Nifty MidCap 100 valuation
- 22.9 times 12-month forward earnings.
- Nifty valuation
- 17.0 times 12-month forward earnings.
- MidCap 100 performance
- Down 1.9% year-to-date and up 88% since the start of 2023, as reported.
- Equity mutual-fund inflows
- Average monthly net inflows of ₹388 billion (US$4.1 billion) so far in 2026.
- Bank credit growth
- 18.1% year-on-year in mid-September; corporate loans rose 21.6% in August.
- Jefferies GDP growth forecast
- 6.5–7% real growth and around 11–12% nominal growth for the fiscal year ending 31 March 2027.
Quotes
Chris Wood
Head of Equities at Jefferies
“From a stock market standpoint, the mid and small-cap segment has been the most interesting part of the equity market. Smaller stocks have continued to outperform the big caps this year despite higher valuations. The Nifty MidCap 100 Index is trading on 22.9x 12-month forward earnings, compared with 17.0x for the Nifty. The Nifty Midcap 100 Index has declined by 1.9% year-to-date and is up 88% since the start of 2023, while the Nifty is down 13.4% year-to-date and up 25% since the beginning of 申”
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Sources
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