Midcaps, smallcaps crash! Is the time for largecaps back?

livemint.com:

General Elections are likely to keep markets volatile in the near term, say experts. The yield on the 10-year US benchmark bond rose to over five percent for the first time since 2007 on Monday, putting pressure on equity markets globally. Though it has receded below 5 percent - but still remains at a multi-year high.

"In addition to rising bond yields, as markets turn wary of further escalation of the war in Israel, risk-off sentiments are now clearly evident. Domestic macro continues to remain resilient. However, risk of deficient rainfall and reservoir levels still lingers on nascent farm income and rural recovery," JM Financial said in a report.

Just in today's deals, the Nifty Midcap index lost as much as 2.3 percent to its intra-day low of 37,655.85, whereas the Nifty Smallcap index fell 3 percent to its day's low of 12,048.75. In comparison, the Nifty fell 1.4 percent to 18,849.15 in today's deals. In October so far, Nifty Midcap index has declined 6.6 percent and Nifty Smallcap index is down 4 percent as against a 3.8 percent fall in benchmark Nifty.

The Midcap index has also lost 9.6 percent from its all-time high of 41,686.75, hit on September 12, 2023. Similarly, the Nifty Smallcap index has also dipped over 8 percent from its peak of 13,148.30, hit on October 18, 2023. In comparison, the Nifty has shed 6.7 percent from its record high of 20,222.45, hit on September 15, 2023.

However, on a YTD basis, the mid and small-cap indices have outperformed benchmarks, rising 20 percent and 26 percent, respectively, as against a 4 percent gain in Nifty. "The main reason for correction can be attributed to the worsening of geo-political tension, rising US yield and profit booking before the upcoming election. FII has