The Indian equity market, including small and midcap segments, witnessed a period of decline for several days leading up to January 12, 2026, primarily driven by concerns over potential US tariffs and persistent foreign fund outflows. However, a significant shift in sentiment occurred on January 12, as markets staged a partial recovery following comments by the newly appointed US Ambassador to India, Sergio Gor. Ambassador Gor, who assumed charge in New Delhi on Monday, January 12, publicly addressed the India-US trade relationship, emphasizing its strategic importance and confirming ongoing active engagement in trade discussions, with the next round of talks scheduled for January 13. He also expressed hope for a visit by President Donald Trump to India and announced India's likely invitation to join PaxSilica, a US-led strategic initiative aimed at building a secure silicon supply chain. These diplomatic signals helped calm investor nerves, which had been rattled by uncertainty around Trump-era tariffs and the prolonged delay in finalizing a trade agreement throughout 2025. While the benchmark indices, such as the Sensex and Nifty, showed a sharp intraday rebound, erasing early losses and snapping a five-day losing streak, the recovery in the broader small and midcap segments was more tempered. On January 12, the BSE Midcap index declined by 0.4% and the BSE Smallcap index fell by 0.7%, even as they pared some of their earlier steep losses. However, the Nifty Smallcap 100 index advanced by 0.6% on January 13, while the Nifty Midcap 100 index saw a slight decline of 0.2%. Overall, the headline's claim of a "partial recovery" for small and midcap stocks is accurate, reflecting the nuanced market response to Gor's reassuring statements amid ongoing broader market volatility.