Retail suffers as Smids suffers ₹26 trillion loss in three weeks

Mumbai: Investors who have invested money in small and medium-sized companies or shares of smaller companies have seen a huge decline in their wealth. 26 trillion since September 20, when the market capitalization of the respective indices hit record highs.

In comparison, BSE’s provisional data shows that the top 10 companies by market capitalization have witnessed a cumulative decline. 5.58 trillion in the same period. The market cap of these companies is more than a fifth of the entire listed universe, underscoring the poor performance of Smids compared to their large-cap peers.

“This shows that small investors, who generally invest in Smids, have suffered from the correction in the last three weeks,” said G Chokkalingam, managing director of Sebi-registered research firm Equinomics. He said he expected the weakness to continue. “A few weeks to a few months until a bottom is formed”, while remaining bullish on the long-term “structural” story.

The market cap of BSE Midcap index of 132 shares has fallen 11.06 trillion from the height of 81.58 trillion on 20 September 70.52 trillion on Tuesday. The BSE Smallcap index, comprising 946 stocks, has seen a decline in assets From a height of 14.95 trillion from 91.51 trillion 76.56 trillion.

Comparatively, the market cap of BSE Sensex fell from 9 trillion from 167.49 trillion 158.38 trillion in the same period

On Tuesday, Smid counters witnessed the biggest decline in two and a half months. The BSE Smallcap index fell 3.8% to 53,530.92 and the BSE Midcap index fell 2.52% to 45,974.31.

What is behind the decline?

The decline strengthened experts’ belief that the negative market sentiment was driven by a confluence of factors like sluggish macroeconomic indicators, rising bond yields and FPI (foreign portfolio investor) outflows amid the presidential elections in the US, the Middle East conflict and weak earnings. Has happened. Development.

Kotak Mahindra AMC Managing Director Nilesh Shah pointed to the recent macro data and said that this has increased uncertainty in the market.

“GST collections in September (6.5% y-o-y) grew below nominal GDP, exports have been hit by rising container freight rates, and record high passenger vehicle inventories (about 800,000) point to sluggish demand,” Shah said. Is.”

“On top of that, FPI outflows from India have accelerated amid rising bond yields ahead of the US presidential elections and strong jobs growth in the US, which may slow the pace of rate cuts by the Fed . “The earnings growth in the second quarter is also showing that valuations in some small and mid-cap counters have gone well ahead of the fundamentals,” he said.

These factors have weighed heavily on mids, which generally outperform large caps in rallies and underperform during pullbacks or corrections.

Veteran investor Shankar Sharma said the fifth year of a bull market usually sees a “relief” and that is what investors are experiencing now.

“Retail should avoid smidgens that have fallen sharply and invest in stocks that have fallen more slowly,” Sharma said.

The prevailing negative sentiment was reflected by Hyundai listing at a discount of 1.5% to its issue price closed at 1,960 and down 7.12% 1,820.40 on Tuesday. Then, shares of food delivery company Zomato fell by 3.6% The company’s Q2 PAT (profit after tax) stood at Rs 256.2. 176 crore missed street expectations.

FPI selling

FPI has sold Rs 72,136 crore this month till October 21, the highest withdrawal in any month so far. Provisional FPI sale took place on Tuesday 3,978.61 crore while DII (Domestic Institutional Investor) made provisional purchases 5,869 crores.

NSE data on retail client sales was not available at press time, but selling by FPIs in index futures increased by 3,102 contracts and investors’ wealth declined due to long liquidation by retail/HNIs ​​(10,841 contracts closed). 9 trillion.

Sensex on Tuesday

On Tuesday, Sensex fell 1.15% to 80,220.72 and Nifty fell 1.25% to 24,472.10. The advance-decline ratio on BSE stood at 0.14. On the Sensex, 29 stocks fell and only one (ICICI Bank) rose.

The biggest losers on the Sensex were Reliance Industries, HDFC Bank, Mahindra & Mahindra, State Bank of India and L&T, which contributed more than half of the index’s 930-point decline.

Pullbacks are characterized by declines of 5-10% from highs, while corrections occur 10-20% below highs, and bearish markets occur below 20%.