Over 50 smallcaps drop 10-50% as broader indices log worst week in 15 months
Apart from the above, DB Realty, Jubilant Industries, PTC India Financial, Skipper, India Nippon, Swan Energy, NALCO, Engineers India, KPI Green Energy, Spencers Retail, Sigachi Industries, Indo Amines, and others are among the smallcaps that logged a double-digit rise in their share prices last week.
Markets’ Weekly Print
The equity indices ended a four-week winning streak to record the worst week in four months after concerns raised by capital markets regulator Securities and Exchange Board of India (SEBI) over valuation in smallcap and midcap stocks. On the weekly front, the 30-share BSE Sensex benchmark tanked 1,475.96 points or 1.99 per cent, while the NSE Nifty declined 470.2 points or 2.09 per cent.
The small- and mid-cap stocks logged their worst week in 15 months on rising concerns of froth in the segments and as stress test results indicated a disparity in the durations that funds would take to liquidate their portfolios. The broader indices dropped 5.5 per cent and 4.66 per cent this week, the biggest weekly drop since December 2022.
Barring information technology, all the major sectors logged weekly losses. Realty, energy and public sector banks were the worst hit, losing between 6.5 per cent and 10 per cent. Bank Nifty settled the week at 46594.10 after falling more than 2.50 per cent.
Foreign institutional investors (FIIs) were buyers for three out of four sessions last week but the net outflow stands at ₹816.91 crore, while domestic institutional investors (DIIs) were buyers for all sessions, with a total investment of ₹14,147.5 crore, according to stock exchange data.
‘’The unfavourable risk-reward balance of mid- and small-cap stocks, fuelled by prolonged premium valuations, has aggravated the downfall. Mid and small caps corrected led by selling from leverage-based retail investors. We expect bargain opportunities to persist in mid- and small-cap stocks whose valuations are supported by fundamentals,” said Vinod Nair, Head of Research, Geojit Financial Services.
Previous Session
Nifty 50 and Sensex closed with significant losses on Friday, March 15, dropping over half a per cent tracking deep losses in oil and gas, auto and energy stocks amid relentless foreign capital outflows. Nifty 50 ended the day at 22,023.35, down 123 points, or 0.56 per cent, and Sensex settled with a loss of 454 points, or 0.62 per cent, at 72,643.43.
Investors continued exercising caution amid persisting concerns regarding rich valuations and froth in certain segments of the market, prompting profit-taking following the healthy gains in the previous session. In the broader market on Friday, the BSE midcap gauge slipped 0.51 per cent, while the smallcap index went up by 0.25 per cent.
The sentiment was further dampened by weak global cues. Investors are now awaiting the upcoming Fed meeting outcome, scheduled for next week, anticipating insights into the central bank’s perspectives on growth, inflation, and the extent of potential rate cuts.
’The recent subdued economic readings related to inflation and IIP numbers too didn’t help either, which has further aggravated the bearish mood. FIIs pressing the sell button in recent trades and crude oil prices rising above $81 a barrel have been prompting investors to offload shares. With uncertainty around, local investors will closely follow global markets to decide on their exposure toward equities,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Where are markets headed?
Next week will be important from an economic perspective as major central banks globally including Japan, the US, and the UK will announce interest rate decisions. US Fed policy outcome and commentary will be important as mixed set macro data has kept investors anxious over rate cut timeline.
Analysts expect the market to remain volatile in the near term with a focus on large caps and defensive names. Indications are in favor of consolidation with negative bias until the Nifty decisively reclaims 22,250 levels.
According to Ajit Mishra, SVP – Technical Research, Religare Broking Ltd, the pace of decline would remain gradual citing the resilience of select heavyweights across sectors. Traders should continue with stock-specific approach and maintain positions on both sides.
‘’Technically, Nifty could gain strength after crossing its biggest hurdle at 22,257 mark while the index has support at 21,875 level,” said Prashant Tapse.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision
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Published: 16 Mar 2024, 09:41 PM IST
