Markets Daily India

History Points to More Upside for India’s Small Caps After April’s 18% Surge

Iran war risks and earnings are set to drive the broader market in May.

Pedestrians walk past the Bombay Stock Exchange building in Mumbai.Photographer: Prashanth Vishwanathan/Bloomberg

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By Chiranjivi Chakraborty and Pratigya Vajpayee

May 4, 2026 at 2:48 AM UTC

This article is for subscribers only.

Good morning...

I’m Chiranjivi Chakraborty in Mumbai, with a quick pulse check as traders return after a long weekend.

Asian stocks are trading near record highs after President Donald Trump said the US will begin guiding some neutral ships trapped in the Persian Gulf out through the Strait of Hormuz from Monday. Investors are keen to see how this will play out, given that a senior Iranian official has warned that Tehran would consider any US interference in the waterway a ceasefire breach.

It’s a mixed outlook for Indian markets. The benchmark Nifty rose 7.5% in April, its strongest month in over two years, but lagged Asian and US peers. Elevated oil prices, a weak rupee and persistent foreign outflows remain headwinds. Still, small caps have outperformed, and there are signs their rally may have further to run.

State election results are the big talking point today — particularly West Bengal. A win there would mark a significant milestone for Prime Minister Narendra Modi’s party. Meanwhile, the earnings season is gathering pace, with heavyweights like Bharat Heavy Electricals, Larsen & Toubro, and auto majors Mahindra, Hero MotoCorp and Bajaj Auto set to report this week.

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