Large, mid, small & microcap stocks: Which equity category has given best returns in last 10 years?

Micro caps lead the decade, large caps reinforce stability

LARGE CAP
The top 100 stocks by market capitalisation fall within the large-cap universe. In 2025, this segment outperformed due to its defensive nature, which helped it withstand trade tensions and global macroeconomic uncertainty. In addition, institutional preference, robust fundamentals, and policy support further bolstered performance.

MID CAP
Stocks ranked between 101 and 250 by market capitalisation comprise the mid-cap universe. The segment delivered a mixed performance in 2025—initially weighed down by weak corporate earnings and heavy foreign investor sell-offs, leading to a sharp 17% decline between January and February. However, sentiment rebounded as the year progressed, fuelled by rising capital expenditure and strategic investments in digital infrastructure. Since February, the index has recovered nearly 19%.

SMALL CAP
These are stocks ranked 251 onwards by market capitalisation. In 2025, the segment faced significant headwinds, including earnings pressure, elevated valuations, and sustained foreign investor outflows, all of which dragged on performance. Moreover, the recovery has been uneven, lacking broad-based momentum.

MICRO CAP
The micro cap category (or Nifty Microcap250 index) includes the top 250 companies beyond the Nifty 500 index constituents, selected based on their average full market capitalisation. The category underperformed in 2025, weighed down by earnings volatility, and a shift in investor preference toward quality and liquidity.

Long-term performance

Although micro caps lagged in 2025, they ranked among the top performers over the past decade. Their long-term outperformance was fuelled by structural trends such as digitisation, automation, and the shift towards localised supply chains. The segment also benefited from a post-Covid surge in retail investor participation, as many were attracted to micro caps for their low entry points and high growth potential. Large caps delivered consistent performance, but trailed other categories due to market saturation and relatively limited growth opportunities. Yet, a 10-year return of close to 14% is on expected lines for the least volatile equity segment.

*2025 returns are YTD and are based on 2 September 2025 closing values. Other years’ returns are calculated using closing values of indices between the first and last trading day. 10-year return is compounded average return, calculated between 2 September 2015 and 2 September 2025. Indices considered: Large cap: Nifty50 TRI, Mid cap: Nifty Midcap150 - TRI, Micro cap: Nifty Microcap250 - TRI, Small cap: Nifty Smallcap250 - TRI. Source: ACE MF.