Small Cap Stocks on NSE: Best Nifty Small Cap 100 Stocks

What are Small Cap Stocks in India?

Small cap stocks in India are shares of companies that have a relatively small market capitalisation compared to mid-cap and large-cap companies. In India, SEBI defines small caps as companies ranked 251 and below in terms of market capitalisation.  

What is Nifty Smallcap 100 Index? 

The Nifty Smallcap 100 is a stock market index that tracks the performance of 100 small cap companies listed on the National Stock Exchange (NSE). These companies rank below large-cap and mid-cap stocks based on full market capitalisation and represent the broader small cap segment across sectors.

Overview of the Top Smallcap Stocks on NSE

1. Multi Commodity Exchange of India Ltd:  Multi Commodity Exchange of India operates India’s largest commodity derivatives exchange. The company enables trading in metals, energy, and agricultural commodities and plays a key role in price discovery and risk management.
2. Hindustan Copper Ltd: Hindustan Copper is a government-owned company engaged in copper mining, beneficiation, smelting, and refining. It operates India’s only vertically integrated copper mining operations.
3. Laurus Labs Ltd: Laurus Labs manufactures active pharmaceutical ingredients and formulations for global markets. The company has a strong presence in antiretroviral, oncology, and other therapeutic segments.
4. Radico Khaitan Ltd:  Radico Khaitan produces and sells alcoholic beverages across India and select international markets. The company operates across value, premium, and luxury spirit categories.
5. Narayana Hrudayalaya Ltd:  Narayana Hrudayalaya runs a network of hospitals and speciality healthcare centres in India and overseas. The company focuses on affordable tertiary care, with a strong presence in cardiac and multispecialty services.

How to Invest in Smallcap Stocks?

Here is how you can invest in small cap stocks on NSE :

1. Open a demat/trading/stockbroker account. You can open a demat account with smallcase!
2. Conduct thorough research into the best small cap stocks on NSE that align with your investment thesis. Investors can use tools like the Tickertape Stocks Screener to do this. The screener offers 200+ built-in filters to choose from, allowing investors to generate a small cap stocks list for comparison.
3. Place a ‘Buy’ Order on the top small cap stocks on NSE

Features of Small Cap Stocks

• Smaller Market Capitalisation: Small cap stocks belong to companies with a lower market value, usually below ₹5,000 cr or ranked 251 and below as per SEBI’s list.
• Early-Stage Business Growth: Many small caps operate in the early or expanding phase of their business cycle, which often gives them more room to scale compared to mature companies.
• Limited Analyst Coverage: Small caps usually receive less research coverage, which means detailed company information may not always be widely available.

Benefits of Investing in Small Cap Stocks

• Room for Expansion: Since many small cap companies are still developing, they may have more room to scale their operations if their products or services gain traction.
• Early-Stage Opportunities: Small caps sometimes operate in emerging or niche areas, offering access to companies that are still building their presence in the market.
• Faster Business Expansion: Small caps can make decisions quickly, launch new products, and enter new markets faster than large companies. This flexibility can support stronger growth during favourable market conditions.

Risks of Investing in Small Cap Stocks

• Business Execution Risks: Smaller companies may rely heavily on a few products, customers, or markets. Any disruption can significantly impact their overall performance.
• Limited Analyst Coverage: Because fewer analysts track small caps, important information may be harder to find. This increases the need for deeper individual research.
• Vulnerable to Market Downturns: Small caps tend to fall faster during market declines. Their recovery may also take longer compared to larger, more established companies.

Factors to Consider While Investing in Small Cap Stocks

• Business Model and Positioning: Understanding how a company operates, the products it offers, and the segment it serves helps provide clarity on its long-term potential and stability within its sector.
• Sector Environment: Some sectors see steady demand, while others move with economic cycles. The broader industry environment can affect how small caps perform over time.
• Valuation Context: Small cap valuations tend to fluctuate, especially during optimistic market phases. Comparing valuation metrics with peers offers a clearer picture of where the company stands.
• Information Availability: Small caps may have limited coverage from analysts or media. Company filings and disclosures become key sources for understanding their operations and financial position.