Stock market today: Midcaps crack 3%, smallcaps plunge 4% as stock market sentiment turns negative
Midcap index cracked nearly 3 per cent in morning trade on Tuesday. The BSE Midcap index fell to an intraday low of 32,177.91, down 2.68 per cent against the previous close of 33,064.96 while the Smallcap index plunged to its intraday low of 37,005.17, down 3.97 per cent against its previous close of 38,533.40 in Tuesday's trade so far. Early morning today, both the mid and smallcap indices hit their fresh record highs of 33,245.85 and 38,769.33 respectively.
Equity benchmark Sensex was also on a volatile track. The equity benchmark saw a swing of nearly 600 points within the first two hours of trade. Meanwhile, Nifty50 hit its fresh record high of 20,110.35 in the morning session today but witnessed volatility thereafter.
Experts were expecting the market to see profit-booking after the recent rally. Some of them were quite vocal in advising staying away from mid and smallcaps. "Investors should avoid the frothy segments of the mid-and small-caps.
In the near term, the market is likely to consolidate around the present levels," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. This year so far has seen robust gains for mid and smallcaps. The BSE Midcap index has surged nearly 31 per cent while the BSE Smallcap index has jumped 33 per cent this year so far (as of September 11 close).
Benchmarks the Sensex and the Nifty have gained over 10 per cent this year. Many mid and small-cap stocks have witnessed a steep rise which seems disconnected from the fundamental factors. Instead, it appears to be driven by investor irrationality, fueled by recent high returns rather than improved company fundamentals, said brokerage firm Kotak Institutional Equities in a report on September 11.
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