Mid and small‑cap stocks outpace majors amid better earnings and cheaper oil

Mumbai, August 8 – A steep fall in crude oil prices and healthier-than‑expected earnings for the FY 2026‑27 Q1 have strengthened investor optimism, propelling Indian markets to a second consecutive week of gains.

Nifty rose 0.77% during the week but dipped 0.27% on Friday, closing at 24,570. Sensex fell 0.58% to 78,499, though it managed a weekly rise of 0.52%.

The broader market outperformed the headline indices. The Nifty Mid‑Cap 100 increased by 0.87% while the Nifty Small‑Cap 100 surged 2.73%, indicating expanding interest in mid‑cap and small‑cap equities alongside large‑cap names.

Analysts pointed to small‑cap stocks as the standout performers, buoyed by strong quarterly results and positive corporate developments. PSU banking shares also attracted interest, thanks to solid fundamentals and stronger financial results.

The metals sector capitalised on robust domestic demand and encouraging growth prospects. Auto stocks benefited from expectations of a surge in vehicle demand during the festive season.

The week opened with some turbulence as the futures‑and‑options market introduced a new closing auction session (CAS). Once participants adjusted, market stability returned.

The plunge in oil prices reduced inflationary pressures and import‑cost concerns, improving the macroeconomic outlook. On the global front, softer US labour data lowered expectations of further Federal Reserve rate hikes, easing bond yields and the dollar, which favoured emerging markets such as India.

Domestically, the RBI left policy unchanged, nudged up its growth outlook slightly, and trimmed inflation expectations, signalling confidence in the economy’s resilience.

Continued earnings beat across sectors has reinforced buying. Market watchers now await US employment and inflation releases for clues on Fed policy, as well as India’s CPI, WPI and credit‑growth data for domestic inflation trends.