It has been a largely negative year so far for many small- and mid-cap stocks, leaving investors with fairly large losses. The BSE Midcap has lost nearly 12.5%, while the NSE Nifty Midcap 50 and 100 have seen a decline of 11.57% and 12.48%, respectively in 2018 so far. On the other hand, the Sensex and Nifty have rallied and hit their all-time highs, mainly due to outperformance of a handful of stocks. Extending its record run for the third straight day, Sensex rose 33.13 points to close at a fresh lifetime high of 36,858.23 on Wednesday. The Sensex has gained 8% Year to Date (YTD), while Nifty has given 5.7% returns this year so far. However, very few investors are cheering the Sensex\u2019s and Nifty\u2019s record high levels as about 70% midcap stocks are trading in the red. Worst performers in the Nifty Midcap 100 index include Vakrangee, PC Jeweller, Suzlon Energy, Bank of India, NBCC India, Union Bank of India, Wockhardt, Mangalore Refinery and Petro in addition to Future Consumer and Century Textiles. The Nifty Midcap 100 index on Wednesday ended 0.05% higher at 18,505.25 points. \u201cMany HNIs were stuck in midcap as their liquidity had dried out. In the last two-three days, we have witnessed some recovery in the midcap space,\u201d said Rusmik Oza, head of fundamental research at Kotak Securities. UBS Securities, which has reiterated its underweight ratings on small- and mid-cap indices for 2018, cited rising interest rates and moderating flows as concerns. \\\u201cIn the first six months of this calendar year, all the major global and domestic indices have corrected. \u201cIndia has also been in the same basket. As large cap companies started delivering reasonable results people started buying these stocks . This led to decent amount of rally in large cap stocks,\u201d explained Alok Singh, CIO at Bank of India (BoI) AXA-IM. Valuations of some midcap stocks had hit significant highs in 2017 and it was also the best performing index. \u201cWhen the risk premium in midcap stocks went up then investors started moving their portfolio in large cap stocks. It is because large stocks provide better visibility of the earnings growth and higher liquidity,\u201d said a fund manager. UBS Securities noted that inflows into local equity mutual funds remain positive but have slowed in the first three months of 2018. \u201cDespite the correction in small and mid-caps, their valuation premium to the Nifty is being sustained above the peaks of 2007-08,\u201d UBS Securities wrote in a recent note. \u201cIn mid-cap some stocks have fallen due to fundamental as well as technical reasons. Also, we hardly find small and mid-cap coverage by a large broker. Hence, FPIs have always been interested in the large cap stocks owning to their better visibility and stability,\u201d added Alok. \u201cNifty has rallied because around 45% earnings is driven by forex driven stocks,\u201d added Rusmik Oza. An analyst explained that Sebi\u2019s orders to inquire the alleged leak of Additional Surveillance Measures (ASM) list also hurted the sentiments of investors.