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 As the markets have largely taken to a downward trend amid high bond yields in the US, small and mid-cap stocks continue to buck the bearish trend.

An ICICI Securities report said that although the Nifty50 is down around 2 per cent from its recent peak, there is no sign of any sharp increase in risk aversion.

"While the benchmark NIFTY50 index is down 2 per cent from the recent peak of 15,300, there is no sign of any sharp increase in 'risk aversion' given the moderate increase in fear index (VIX at 25) and outperformance of strategies such as high beta (up 4 per cent), CPSE (9 per cent), smallcaps (5 per cent), midcaps (3 per cent) and dividend yield (2 per cent) strategies continuing to outperform," it said.

Further, among the sectors, the performance is led by metals (up 8 per cent), power (7 per cent), energy (7 per cent), media (4 per cent), infrastructure (2 per cent), consumer durables (1 per cent) and PSU banks (1 per cent).

On the other hand, heavy weight underperforming sectors include banking, auto, pharma and telecom, which are down 5 per cent, 4 per cent, 5 per cent and 7 per cent respectively.

Further, FMCG and IT stocks were largely in-line with market performance.

The ICICI Securities report, noted that the rise in US bond yields is causing volatility in global capital markets over the past two weeks, and the underpinnings driving the rise in yields such as faster-than-expected growth driving inflation, are largely positive for equities unless inflation and yields go out of hand which appears unlikely.

"In our view, equities as an asset class performs better in an environment of 'rising growth' and 'moderate inflation'," it said.

In January the consumer price index was benign at 4 per cent although core inflation remains sticky at 5.3 per cent along with manufacturing inflation within WPI elevated at 5 per cent reflecting pricing power of manufacturers, it added.