Author: Aarya Shah | EQMint | Market News

As the festive lights of Diwali approach, the Indian stock market often mirrors the season’s exuberance. But in the year leading up to Diwali 2025, the market saw more than just a spark—it witnessed a full-blown rally in select smallcap stocks that transformed early gains into astonishing multibagger returns.

In the week before Diwali 2024, hundreds of smallcap stocks soared over 10%, fueled by optimism, liquidity, and retail enthusiasm. While most fizzled out after the festive rush, a select few sustained their momentum and went on to double or even triple investors’ wealth over the following year.

Out of nearly 300 smallcaps that recorded double-digit weekly gains before the festival, only a handful managed to stay strong. Most saw corrections once the short-term euphoria faded, but nine stood apart—turning into true multibaggers, with returns ranging from 100% to nearly 200%.

The Nine Star Performers

These nine companies came from diverse sectors—manufacturing, engineering, technology, and infrastructure—but shared a common pattern: a strong pre-Diwali rally backed by improving fundamentals or positive business developments.

1. Cupid Ltd – Jumped around 12% in the pre-Diwali week and went on to deliver an impressive 198% gain over the following year, driven by strong order inflows and export traction.
2. ASM Technologies – Rose about 10% before Diwali and continued its upward momentum to record 151% annual returns, aided by new client additions and business expansion.
3. Shaily Engineering Plastics – Advanced roughly 13% ahead of Diwali and ended the year up 136%, supported by robust order books and export demand.
4. AGI Infra – Gained nearly 23% in the pre-festival week and achieved 134% returns in a year, benefitting from a surge in infrastructure and construction activity.
5. Amal Ltd – Climbed around 12% before Diwali and posted 133% yearly gains, driven by operational improvements and strong demand in the specialty chemicals segment.
6. CarTrade Tech Ltd – Moved up about 11% during the festive week and registered 124% returns, supported by platform growth and improved investor sentiment in the tech sector.
7. Tourism Finance Corporation of India (TFCI) – Rose nearly 21% in the week leading up to Diwali and went on to deliver 124% gains as travel and hospitality investments picked up.
8. Timex Group India – Increased by about 21% during the pre-Diwali rally and recorded 123% annual returns, reflecting steady consumer demand and brand recovery.
9. Banco Products (India) Ltd – Gained close to 13% in the festive week and ended the year with 118% gains, powered by strong automotive sector demand and export growth.

These stocks weren’t just momentum plays—they were supported by tangible growth stories, turnaround triggers, or sectoral tailwinds that extended well beyond festive cheer.

Why Most Fail—but a Few Shine

Of all the smallcaps that spiked before Diwali 2024, over two-thirds ended the following year with negative returns. This underlines how volatile and speculative smallcap rallies can be. Seasonal optimism, retail trading activity, and algorithmic trends can push prices quickly, but without strong fundamentals, such rallies rarely last.

What separates the winners is sustainability.

The nine multibaggers combined festive momentum with credible business improvements—such as new contracts, margin expansion, debt reduction, or capacity addition. These developments gave investors a reason to stay invested long after the candles went out.

In contrast, the underperformers mostly lacked follow-through earnings, triggering profit booking and value erosion once short-term traders exited.

Investor Lessons from the Festive Rally

Every year, the market witnesses a wave of optimism leading up to Diwali. Portfolio reshuffling, fund positioning, and festive buying often inject fresh momentum into small and mid-cap stocks. But as the data shows, only a select few carry that strength forward.

For investors, the key takeaway is clear:

1. Don’t chase every rally. A pre-Diwali jump doesn’t guarantee long-term performance.
2. Watch for catalysts. Companies announcing new projects, expansions, or strong results often sustain gains longer.
3. Avoid herd mentality. By the time a stock becomes a “Diwali favorite,” most of the easy money has already been made.
4. Track fundamentals. Momentum backed by improving financials is more reliable than mere sentiment.

Will Diwali 2025 Repeat the Magic?

With festive optimism already building this year, many investors are watching for another round of pre-Diwali fireworks. The broader smallcap index has shown renewed strength amid India’s robust economic growth, credit expansion, and infrastructure push.

However, valuations are high in several pockets, and the market has become more selective. Investors should focus on fundamentally sound companies with upcoming catalysts rather than chasing high-flyers purely on momentum.

If history is any guide, a few hidden gems will likely emerge again this Diwali—but identifying them early and holding with discipline will separate successful investors from the hopeful ones.

Conclusion

The story of these nine smallcap multibaggers proves that festive rallies can sometimes lead to life-changing returns. Yet, it’s also a reminder that fortune favors the informed. The pre-Diwali rally may light the fuse, but it’s fundamentals that keep the flame alive.

Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.