_{Published on: 11 Dec, 2025 12:24}

As of 28-Nov-2025 NIFTY Small Cap index returns for different periods are following:

• 1-year: NIFTY SmallCap 250 returned -5.55%.
• 3-year CAGR: NIFTY SmallCap 250 returned 20.13%.
• 5-year CAGR: NIFTY SmallCap 250 returned 24.45%.
• 7-year CAGR: NIFTY SmallCap 250 returned 18.41%.
• 10-year CAGR: NIFTY SmallCap 250 returned 14.08%.
• 15-year CAGR: NIFTY SmallCap 250 returned 12.25%.
• 20-year CAGR: NIFTY SmallCap 250 returned 12.99%.

The NIFTY Smallcap indices- comprising the NIFTY Smallcap 50, NIFTY Smallcap 100, and NIFTY Smallcap 250-are essential tools for tracking the performance of small-cap companies in the Indian stock market. These indices focus on smaller companies, which are known for their high growth potential but also come with higher volatility and risk compared to larger, more established companies.

1. NIFTY Smallcap 50: This index tracks the 50 smallest companies by market capitalization in the small-cap category. It provides insights into the performance of smaller, high-potential companies, though these companies tend to be riskier due to their size and market sensitivity.

2. NIFTY Smallcap 100: This index expands the coverage to the 100 smallest companies, offering a broader view of the small-cap market. It helps investors gauge the performance of a larger group of small companies, balancing risk and opportunity.

3. NIFTY Smallcap 250: The most comprehensive of the three, this index tracks the 250 smallest companies by market capitalization. It provides the widest perspective on the small-cap market, reflecting the performance of a diverse range of small companies.

1. Growth Opportunities: Small-cap companies are often in the early stages of growth, making them attractive for investors seeking high returns. The NIFTY Smallcap indices help identify these high-growth opportunities, especially during bullish market phases.

2. Diversification: Investing in small-cap indices allows investors to diversify their portfolios beyond large-cap and mid-cap stocks. This can be particularly beneficial when small-cap companies outperform during certain market cycles.

3. Market Sentiment: The performance of small-cap indices is often seen as an indicator of broader market sentiment. When these indices perform well, it typically signals that investors are willing to take on higher risk for potentially higher rewards.

4. Volatility and Risk: Small-cap stocks are known for their higher volatility, and the NIFTY Smallcap indices reflect this characteristic. They are useful for understanding the risk-return dynamics of the small-cap segment.

While small-cap indices offer exciting growth opportunities, they also come with significant risks that investors should be aware of:

1. Higher Volatility: Small-cap stocks tend to experience larger price swings compared to large-cap stocks. This volatility can lead to significant gains but also substantial losses, especially during market downturns.

2. Liquidity Risk: Small-cap stocks often have lower trading volumes, making it harder to buy or sell shares without affecting the stock price. This can be a challenge for investors looking to enter or exit positions quickly.

3. Business Risk: Small companies are more vulnerable to economic downturns, competition, and operational challenges. They may lack the financial stability and resources of larger companies, making them riskier investments.

4. Market Sensitivity: Small-cap stocks are more sensitive to changes in market sentiment and macroeconomic factors. Negative news or economic uncertainty can disproportionately impact small-cap companies.

5. Limited Track Record: Many small-cap companies are relatively new or have limited operating histories, making it harder to assess their long-term potential and stability.

In the below subsection, we will do a detailed performance analysis of each index which will include their return and risk analysis since 2005. This analysis will also help mutual fund investors in the risk-return profile of small-cap mutual funds as there is a dearth of data related to small-cap mutual funds which goes back up to 2005.   

 

The NIFTY SmallCap 250 Index captures the pulse of India’s 250 most liquid small-capitalisation companies. From the euphoric 2007 bull market to the 2020 pandemic crash, the data reveal how different holding periods smooth (or accentuate) the ride. Below, we slice the 20-year history into six distinct lenses: 1-year, 3-year CAGR, 5-year CAGR, 7-year CAGR, 10-year CAGR, and 15-year CAGR.

 

 

NIFTY Smallcap 250 - Rolling Returns Analysis (as of 28-Nov-2025)

1-Year Return: Classic Smallcap Rollercoaster Average (2006-2025): 20.88%

• Range: -66.35% (2008) to +114.14% (2009)
• Standard Deviation: 41.86%
• Positive/Negative Years: 14 positive, 6 negative
• Current Year (2025): -5.55% — only the 6th negative year in two decades, reminding us that sharp drawdowns are part of the smallcap journey.

3-Year CAGR: High Volatility, High Reward Average (2008-2025): 12.67%

• Range: -8.6% (2008) to +33.23% (2023)
• Standard Deviation: 13.95%
• Positive/Negative Years: 14 positive, 4 negative
• Current Period (2023-2025): 20.13% — well above the long-term average, showing strong recovery power after the 2020-2022 cycle.

5-Year CAGR: Where Smallcaps Truly Shine Average (2011-2025): 13.05%

• Range: -4.62% (2012) to +29.68% (2024)
• Standard Deviation: 9.14%
• Positive/Negative Years: 15 positive, 1 negative
• Current Period (2021-2025): 24.45% — the second-highest 5-year return on record and significantly above the long-term average.

7-Year CAGR: Remarkably Consistent Mid-Term Gains Average (2012-2025): 12.01%

• Range: 2.27% (2013) to 22.05% (2015)
• Standard Deviation: 5.27%
• Positive/Negative Years: 14 positive, 0 negative
• Current Period (2019-2025): 18.41% — one of the strongest 7-year stretches ever seen.

10-Year CAGR: Decade-Long Wealth Creation Average (2015-2025): 12.55%

• Range: 6.60% (2020) to 19.21% (2023)
• Standard Deviation: 4.28%
• Positive/Negative Years: 11 positive, 0 negative
• Current Period (2016-2025): 14.08% — comfortably beating inflation and most other asset classes over a full decade.

15-Year CAGR: Rock-Solid Long-Term Compounding Average (2010-2025): 12.06%

• Range: 7.41% (2022) to 17.97% (2023)
• Standard Deviation: 3.74%
• Positive/Negative Years: 6 positive, 0 negative
• Current Period (2011-2025): 12.25% — almost identical to the historical average, proving consistency over very long horizons.

20-Year CAGR: The Ultimate Proof of Patience Average (2005-2025): 12.99%

• Only one data point available
• Current 20-Year Period (2006-2025): 12.99% — delivering equity-like returns with classic smallcap intensity over a full generation.

Key Takeaway Despite the current 1-year dip of -5.55%, the NIFTY Smallcap 250 continues to exhibit one of the strongest multi-year compounding stories in Indian equities. The 5-year and 7-year CAGRs are currently near their all-time peaks, underlining that smallcaps reward investors who can withstand short-term turbulence.