BSE MidCap falls 1.80% to 7-week low, smallcap index hits 4-week low; here's why
Sequent Scientific, Kirloskar Brothers, Hindustan Construction Company, Ion Exchange (India), Jubilant Pharmova, Jai Corp, and KIOCL, all witnessing losses of over 10% in trade. Other stocks such as Vascon Engineers, Onward Technologies, MTNL, Parag Milk Foods, Asian Granito India, Star Cement, Man Industries (India), Titagarh Rail Systems, Orient Paper & Industries, B L Kashyap & Sons, SEPC, Sasken Technologies, Prime Focus, and Atul Auto recorded declines in the range of 8–10%.
In the BSE MidCap index, Laurus Labs stood as the top loser with a 9% decline, followed by SJVN, Indian Overseas Bank, Bank of India, IRFC, Aditya Birla Fashion and Retail, UCO Bank, Vodafone Idea, Union Bank of India, and Bharat Heavy Electricals, with all experiencing losses of over 5% in trade. Anirudh Garg, Partner and Head of Research at Invasset, PMS, said, "We anticipate a potential short-term correction in the financial markets due to various global concerns.
The ongoing Israel-Gaza conflict involving multiple countries has introduced uncertainty, leading to a surge in gold and bond prices and contributing to negative sentiment. Additionally, escalating oil prices have further fueled this negativity.
We anticipate a potential 10% correction in the Nifty 50 index and a more substantial 12% to 15% correction in midcaps and small caps." "The perception of overpriced stocks primarily stems from the focus on bullish sectors, particularly capital goods, pushing capital towards mid- and small-cap companies. However, these valuations may not be justifiable, especially if growth decelerates, potentially resulting in a significant 50% P/E devaluation," he added.
"We advocate selective investments. Some companies may maintain reasonable valuations,
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