Business Market 23 Feb 2016 Smallcap stocks take ...

Smallcap stocks take bigger hit on Dalal Street

Published Feb 23, 2016, 12:54 am IST
Updated Feb 23, 2016, 12:54 am IST
Bombay Stock Exchange
 Bombay Stock Exchange

New Delhi: Small and medium companies listed on the Bombay Stock Exchange (BSE) have taken a bigger hit compared to their bigger peers amid extreme weakness in the broader market as the two indices has cracked by up to 16.5 per cent against nine per cent decline in the 30-stock Sensex so far this year.

While the mid-cap index fell by 12 per cent to 9,802.77 points, losses were more sharper in the small-cap index which plunged 16.56 per cent to 9,876.53.
In comparison, the benchmark Sensex dipped by 9.22 per cent to 23,709.15. It touched its 52-week low of 22,600.39 on February 12.

The mid-cap and small-cap indices also hit their all-time low mark of 9,393.15 and 9,400.37, respectively, on February 12.

The investor sentiment was hit mostly by volatility in global crude oil prices, concerns over the health of the Chinese economy and fears of a global slowdown.

Experts said domestic woes, including ballooning bad debts reported by public sector and private sector banks and weak quarterly earnings in various other sectors, have also added to the market weakness.

The Sensex crashed by 807 points to drop below 23,000-mark on February 11, dragged down by the concerns over global economy and mounting bad loans.

The mid-cap index is also down 15.97 per cent from its all-time high of 11,666.24, while small-cap has come down by 19 per cent from its record peak of 12,203.64.

The Sensex has also come off 21 per cent from its all-time high of over 30,000, scaled on March 4, 2015. In market terms, a fall of 20 per cent from an all-time peak is considered to be as a ‘bear market’.

The broader market performance is complete opposite to last year, where it was minnows who ruled in 2015 as mid-cap and small-cap stocks beat their blue-chip peers for the second year in a row with an average return of up to 7.4 per cent.

In 2015, Sensex fell by 1,381.88 points, or five per cent, after gaining nearly 30 per cent in 2014.

Market players say smaller stocks are generally bought by local investors, while overseas investors focus on blue-chips. The mid-cap index tracks companies with a market value that is on an average one-fifth of blue-chips or large firms. Small-cap firms typically have one-tenth of the valuation that a blue chip company companies.



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