Markets have been in a phase of correction since the Sensex and Nifty hit their all-time highs on September 26.

The market’s exuberance over Donald Trump’s win lasted just a day, and it turned back to red on Thursday and Friday.

FPI outflows and worries on earnings slowdown have been bolstering the bearishness in the markets.

An analysis of the market correction since September 26 shows that the fall has been broad-based with 7 in 10 stocks of the BSE Allcap Index giving negative returns during this phase of correction.

Here’s a further slicing and dicing of the fall:

Mid-, small-caps resilient

Nifty and Sensex have corrected 8.3 per cent and 7.9 per cent, respectively, from all-time highs.

However, mid- and small-cap indices fared better, with BSE MidCap and BSE SmallCap shedding only 6.4 per cent and 3.1 per cent, respectively, since September 26.

Nine in 10 large-cap stocks lost in this correction, while it is 8 in 10 for mid-caps and 7 in 10 for small-caps.

IndusInd Bank (-27.2 per cent) and Avenue Supermarts (-25.3 per cent) led the correction in large-caps. L&T Finance (-22.8 per cent) and Colgate Palmolive India (-21.3 per cent) were the top losers in mid-caps while the downward march in small-caps was led by Spandana Sphoorty Financial (-33.5 per cent) and CPCL (-28.7 per cent). This relatively less-turbulent show by the mid- and small-caps though has widened their valuation gap to the large-cap index. The trailing-twelve-month (TTM) PE of BSE Smallcap is now at a premium of 58.9 per cent to that of Sensex, as against 48.3 per cent when they were trading at all-time highs.

The same number stands at 43 per cent for mid-caps now against 37.2 per cent.

Auto skids

All the sectoral indices are in the red with BSE Auto leading the list of laggards, shedding 12.9 per cent, closely followed by Realty and Energy.

While valuations heating up could be a reason for the sharp corrections in the latter, auto, in particular, is seeing a demand slowdown especially in the PV segment.

The healthcare index hardly dropped during this correction (-0.1 per cent), unaffected by commodity costs or general consumption slowdown, which plagued many others.

Outlook unclear

India has seen bulls on a gallop since the Covid-19 crash. While there were corrections along the way, investors seemed to whisper, ‘Why do we fall, Bruce?’ to the markets, while buying into every dip.

With heightened valuations, global risks and earnings slowdown worries, could it be different now? Only time can tell.

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