Stock market today: Massive profit-booking in midcaps and smallcaps; analysts advise to be 'selective' in stock picks
SJVN, Amber Enterprises, NBCC (India), HUDCO, IRB Infrastructure Developers, Indian Overseas Bank and MCX India were among the drags on the smcallcap index as they fell in the range of 9% - 20%. In the Nifty Midcap 100 index, NHPC, IRFC, Bharat Dynamics, RVNL, and Yes Bank shares declined the most with a loss of around 8% - 12%. Also Read: NHPC share price declines 10% ahead of Q3 results today. Should you Buy, Sell or Hold the stock? Analysts have raised concerns about the frothy valuations of the broader market and find safety in large-caps for the long-term perspective.
“Midcap and smallcap stocks are witnessing profit booking after a sharp run up. Markets are exhausted at higher levels and some of the money is shifting towards IPOs. Valuations in mid and smllcap space are still expensive and the incremental upside seems limited," said Avinash Gorakshakar, Head - Research, Profitmart Securities Pvt.
Ltd. Gorakshakar suggests investors to book profits in midcap and smallcap stocks which are trading at stretched valuations and be selective in this space. Meanwhile, some analysts also attribute the correction in midcap and smallcap stocks partially to the increase in margins on the MTF (margin trading facility) by broking firms.
Certain brokerage firms reportedly have raised margins on their BNPL (buy now, pay later) service amid a spike in volatility in the stock market. Also Read: NBCC stock slides for 6th day in a row, locked in 10% lower circuit; here's why Vinod Nair, Head of Research, Geojit Financial Services said that the increase in margins have largely affected the midcap and smallcap stocks and he believes the sentiment in the broader indices remains vigilant due to their rich valuation. “Valuations of broader
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