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Nifty 50 gains 1.91%, microcaps crash nearly 9% in October: Should investors shift SIPs to large caps?

Nifty 50 gains 1.91%, microcaps crash nearly 9% in October: Should investors shift SIPs to large caps?

The Nifty 50 gained 1.91% in October, even as microcaps plunged 8.95% and smallcaps fell 5.81%, according to Motilal Oswal Mutual Fund. The sharp divergence raises a key question for SIP investors: Is it time to shift towards large-cap funds or stay invested in smaller stocks?

Business Today Desk
Business Today Desk
  • Updated Nov 7, 2026 2:18 PM IST
Nifty 50 gains 1.91%, microcaps crash nearly 9% in October: Should investors shift SIPs to large caps?October's nearly 11-percentage-point gap between Nifty 50 and microcaps highlights the need for diversification. Investors should review portfolio concentration and rebalance if needed rather than abruptly stopping SIPs.

Indian equity markets witnessed a sharp divergence in October 2026, with large-cap stocks outperforming while mid-, small- and microcap indices suffered significant losses. The contrasting performance has raised a crucial question for mutual fund investors: Is it time to redirect SIPs towards large-cap funds or continue investing in smaller companies despite the correction?

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According to Motilal Oswal Mutual Fund's Global Market Snapshot – October 2026, the Nifty 50 gained 1.91% during the month, while the Nifty Microcap 250 plunged 8.95%. The Nifty Smallcap 250 declined 5.81%, Nifty Midcap 150 fell 3.75%, and Nifty Next 50 lost 2.92%. The broader Nifty 500 also slipped 0.80%.

The report highlighted: "Nifty 50 gained 1.91% in October, while the rest of the market cap spectrum declined."

How much did investors lose?

The divergence becomes clearer when translated into investment values.

A hypothetical ₹1 lakh invested in an instrument perfectly tracking the Nifty 50 would have grown to ₹1,01,910 during October. In comparison, ₹1 lakh tracking the Nifty Microcap 250 would have fallen to ₹91,050, representing a loss of ₹8,950.

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Similarly, ₹1 lakh tracking the Nifty Smallcap 250 would have declined to ₹94,190, while an equivalent midcap investment would have fallen to ₹96,250.

These calculations reflect index movements, excluding fund expenses, tracking differences and taxes. Actual mutual fund returns may differ.

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Why did large caps outperform?

October's performance suggests investors favoured relatively established companies over smaller businesses amid broader market weakness.

Sectoral trends also reflected sharp divergence. Information technology surged 17.69%, while Healthcare gained 1.93% and Banking advanced marginally by 0.10%.

Meanwhile, Metals declined 7.65%, Defence fell 6.17%, and Consumer Durables dropped 5.74%.

Motilal Oswal's report noted that IT contributed 0.99 percentage points to Nifty 500 returns, while Telecommunications added 0.32 points. However, Industrials and Commodities each dragged returns by 0.54 percentage points.

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Should investors switch SIPs to large-cap funds?

For investors running SIPs in small- and mid-cap mutual funds, October's correction highlights the importance of risk management rather than an immediate need to exit.

Large-cap funds generally offer exposure to established companies with relatively greater liquidity, while smaller companies can experience sharper fluctuations during market corrections.

However, shifting SIPs solely because large caps outperformed in one month could mean reacting to short-term volatility rather than following long-term financial goals.

Investors with shorter investment horizons or lower risk tolerance may consider reviewing their allocation towards large-cap and diversified equity funds.

Those investing for longer-term goals can evaluate whether their existing small- and mid-cap exposure remains consistent with their risk appetite.

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Disclaimer: Business Today provides market and personal news for informational purposes only and should not be construed as investment advice. All mutual fund investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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Business Today Desk
Business Today Desk

Business Today brings you the latest news, views and analysis from the world of finance, economy, markets, corporates, startups, tech, and the digital economy. You can find everything from breaking news to deep dives to immersive essays and more on a variety of subjects across all formats - online, magazine, television, data visualisation, et al.

Published on: Nov 7, 2026 2:18 PM IST