What if India's small- and mid-cap stock bubble bursts?
A 40% crack in frothy Indian small/mid-caps as retail SIP flows reverse is a positioning unwind: short the SMID complex and leveraged retail favorites as flows turn, with global high-beta a sympathetic but secondary move. Rhymes with the 2018 Indian micro-cap crash after the 2017 SIP-fueled melt-up, when reclassification and outflows halved many names. Transmission is largely domestic-retail. Forward: SIP flows are far larger and stickier than 2018, so the unwind needs a genuine flow reversal — not just a valuation wobble — to trigger.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Frothy small- and mid-cap valuations crack 40% as retail SIP flows reverse, exposing leveraged retail positioning. The trigger decomposes into signed root‑shocks — Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.