Santa Rally Expected to Boost Small-Cap Stocks

The Santa Claus Rally is expected to boost small and mid-cap stocks in the last five days of 2025 and the first two days of 2026.

Historically, small-cap stocks have seen an average return of 3.55% during this period, while mid-cap stocks have averaged 2.63%.

However, small-cap stocks have struggled in 2025, with the Nifty Smallcap 100 index down 9% year-to-date.

Experts believe this weakness could be a good time to invest in quality small-cap stocks for the long term.

The rally is driven by positive sentiment and year-end positioning rather than underlying fundamentals.

Technical analysts note that the index is attempting to stabilize, but near-term volatility is likely to continue.

Investors are advised to be selective and focus on quality stocks.