The benchmark indices BSE Sensex and the NSE Nifty may be hovering near the peaks they registered in July. But the devil is in the detail.
Mid- and small-cap shares witnessed severe selling pressure on Wednesday.
The BSE Midcap Index fell 2.2 per cent to 8,855.24, and the Smallcap Index slumped 2.7 per cent.
A quick recap of the performance of mid- and small-cap stocks, until now the darlings of market participants, will tell the real story that has been unfolding in recent weeks, especially since the Budget presentation.
For those who thought they had missed the bus and entered the markets in the mid- and small-caps space in mid-July, the pain would be severe.
Against the Sensex and Nifty’s declines of 1.5 per cent and 2 per cent, respectively, from their peaks, the CNX Midcap has tumbled 8 per cent and the CNX Small-cap crashed 14 per cent. Both these indices peaked around the time the Union Budget was presented.
Leading the pack were C Mahendra Exports and Bhushan Steel. Both stocks plunged 70 per cent, the latter on the allegations of bribery involving the Syndicate Bank chairman.
Over the last one month, as many as 560 stocks from the mid- and small-cap space lost over 25 per cent.
And, ten stocks from the Junior Nifty, including Power Finance Corporation, Bank of India, Reliance Communications, Reliance Power and Rural Electric Corporation, too tumbled over 25 per cent.
Since the Union Budget was presented on July 10, foreign institutional investors have pumped in about ₹3,750 crore into Indian equities.
According to Arun Kejriwal of KRIS Securities, it is not yet time to press the panic button. Despite the recent fall, some stocks in the mid- and small-cap space are still ruling much higher than their 52-week/all-time lows, as they have been gaining steadily since February on expectations of a stable Government coming to power at the Centre.
Some of them are now correcting as they have run ahead of fundamentals.
Steep correction Kejriwal said those who entered the market on SMS-based advice, without undertaking due diligence, had to pay the price. “Those who entered the moving bus can only get off while it is in motion. They can’t wait till the terminus.”
Analysts said that stocks in the realty, infrastructure, power, sugar and banking sectors have witnessed steep correction. However, post-correction most of these stocks now offer good value, they added.