Mid- and Smallcap Stocks Decline as Global Tariff Dispute Weighs on Markets

Market Overview

On Wednesday, mid- and smallcap indices experienced a sharp decline of up to 2 per cent, mirroring the broader downturn in benchmark indices. This drop followed intensified global selling pressure after the United States introduced new reciprocal tariffs impacting imports from nearly 60 countries.

One of the significant actions included a 104 per cent duty on Chinese goods, raising fears of retaliatory moves by trading partners. These developments created uncertainty across international markets, including India, leading to heavy sell-offs across sectors.

Sector Impact and Key Developments

The Nifty Smallcap index declined by 1.87 per cent, reversing its previous day's gain of over 2 per cent. Companies such as BLS International Services, Amber Enterprises, IIFL Finance, Piramal Pharma, and Anant Raj were among the top decliners, each falling as much as 5 per cent.

Similarly, the Nifty Midcap index dropped by 1.8 per cent after posting a 2.11 per cent rise in the earlier session. Stocks like Muthoot Finance, Biocon, The Phoenix Mills, Coforge, and Glenmark Pharmaceuticals recorded losses of up to 10 per cent.

Company Highlights

IIFL Finance Share Price

IIFL Finance was also significantly impacted, reflecting investor concerns following regulatory developments.

Gold loan financing firms like Muthoot Finance and IIFL Finance came under added pressure after the Reserve Bank of India announced plans to release comprehensive guidelines on gold loans soon. This regulatory update contributed to the bearish sentiment in the sector.

Macroeconomic Outlook

Investor worries were further compounded by a statement from the Reserve Bank of India in its first bi-monthly policy announcement for FY26. The central bank flagged the risk that the new 26 per cent duty on Indian goods imposed by the US might reduce India’s GDP growth forecast by 20–40 basis points. This could reduce the expected growth rate from 6.7 per cent to around 6.1 per cent.

Additionally, the pharmaceutical sector was weighed down by indications that the US administration might impose new tariffs on pharmaceutical imports soon.

Summary

Mid- and smallcap stocks faced significant losses amid widespread market weakness driven by heightened global trade tensions. Key sectors, including finance and pharmaceuticals, were notably affected as investors reacted to fresh tariffs and potential regulatory changes. The market’s performance highlighted the impact of international economic policy decisions on domestic equities.