The April ceasefire has lifted the BSE SMID 400 index back to its pre-US-Iran war level of around 12,000. Analysts do not expect this relief rally to break the index out of its two-year trading range between 11,000 and 13,000. Prateek Parekh and Priyanka Shah at Nuvama note that the index trades at roughly four times price to book, a 20 percent premium to its 10-year average.
Kusha Gupta from SKG Investment and Advisory highlights that the derating in SMIDs began before the US-Iran conflict. The index peaked in September 2024 and had already slipped into its current range. Manish Sonthalia from Emkay Investment Managers states that liquidity has shifted away from small- and mid-caps toward large-caps.
Chirag Muni of Anand Rathi Wealth sees the war’s effects in rising oil prices and tightening liquidity. He expects SMIDs to remain range-bound for now, with longer-term direction depending on company-specific fundamentals. Analysts agree that the US-Iran conflict accelerated the derating but was not the root cause.
