New Delhi, Feb. 27 -- In the past six months, some mid- and small-cap information technology (IT) stocks have lost more than a third of their value, according to a Mint analysis, raising questions about where alpha returns will come from next.

Over the same six months, the Nifty Smallcap 250 index has fallen just over 4%, while the Nifty IT index has shed 15%.

Liquidity constraints and investor caution have hit smaller IT firms harder than their large-cap peers, exposing vulnerabilities in revenue diversity and balance-sheet strength, market participants said. Large-cap companies, by contrast, benefit from scale, deeper client relationships, and financial heft, offering some downside cushion.

Investor positioning in the sector has shif...