India's BSE SmallCap index has experienced a significant downturn in 2025, falling over 11 percent in dollar terms and underperforming global assets. This decline follows strong gains in previous years and is attributed to stretched valuations, weaker earnings, thin liquidity, a weakening rupee, and foreign fund outflows. Experts anticipate continued underperformance for small-cap stocks, with many trading significantly below their peaks, while gold and silver have emerged as top global performers.