Indian equities are split sharply between largecaps and smaller stocks. The Nifty is down 14% in 2026, while midcaps have fallen just 2%, smallcaps have gained 8% and microcaps 15%. Record FPI selling of ₹2.8 lakh crore has hit largecaps hardest, making beaten-down largecaps look relatively attractive while elevated smallcap valuations leave little room for earnings disappointment.