India’s small-cap mutual funds drop up to 5 % in three months: opportunity or warning?

An analysis of Indian small-cap equity mutual funds shows some have fallen by as much as 5 % over the past three months, with the average decline about 1.42 %. Experts suggest the performance weakness stems from valuation pressures, liquidity concerns and external headwinds rather than a fundamental breakdown. Some analysts view the pull-back as a selective buying opportunity, while others caution that the concentration and liquidity risks in smaller stocks warrant greater caution. Retail investors and fund advisers are watching for signs of recovery or further stress.