In 2022, the benchmark Nifty 50 has managed to outperform midcap and smallcap stocks. However, the upside in these indices has been lower in 2022 compared to 2021, due to geopolitical tensions, rising interest rates scenario, inflationary pressures, and other macroeconomic risks which led to extreme volatility. Notably, smallcaps on NSE took a massive beating amidst volatile markets compared to midcaps and largecaps. But the current index ratio indicates that there is more potential for buying in all three indices. However, ICICI Direct expects small-caps and midcaps to outperform the Nifty index over the next 2 years, starting in 2023.