Why Indian small caps are flashing all the wrong signals.

I rarely write about specific market segments. But the small-cap data this month is so unusual that I have to flag it. • NIFTY Small Cap 250 P/E: 33 (vs 10-year avg of 22) • 14% of small caps have promoter pledges > 50% • FII selling in small caps for 8 weeks straight • Mutual fund inflows into small-cap funds: ₹4,200 Cr in April alone (highest ever) In a normal market, these signals don't all flash at once. When they do, history says one thing: there's a correction coming in the 3-9 month window. This isn't a prediction. Markets stay irrational longer than you stay solvent. But the asymmetric risk is now negatively skewed. If you're heavy small caps (>40% of portfolio), this is a moment to consider rebalancing. Not panic selling. Just rebalancing toward large caps with cleaner balance sheets. Buffett: "The most dangerous moment is when you feel certain you're right."