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Dalal Street minions caught in a bear trap, over 200 smallcaps see double-digit fall in Feb

Synopsis

Smallcap stocks on Dalal Street fell in February due to frothy valuations and selling. SEBI raised concerns and asked mutual funds to protect investors. Stocks like Sula Vineyards, Jubilant Industries, and others had significant price movements.

Dalal Street minions caught in a bear trap, over 200 smallcaps see double-digit fall in FebiStock
After the unprecedented bull run in the last one year, smallcap stocks on Dalal Street were caught in a bear trap as frothy valuations triggered selling and saw as many as 215 stocks fall in double digits in February.

The selling in this space intensified this week after capital market regulator SEBI raised concerns over the steep run in the midcap and smallcap stocks and the unprecedented inflows that these funds have also seen in the last one year.

The regulator has asked mutual funds to frame a policy to protect the interest of investors of small and midcap schemes.

SEBI said that asset management companies should take appropriate and proactive measures to protect investors, including but not limited to moderating inflows, portfolio rebalancing, etc.

The S&P BSE Smallcap index lost 1.6% in February following a 24% rally in the preceding three months.

The big losers include Sula Vineyards, Mishra Dhatu Nigam, Reliance Power, Andrew Yule, National Fertilizers, MOIL, Onmobile Global, IFGL Refractories, and Ramky Infrastructure as these stocks shed 20-35%.

The Outliers

While the segment succumbed to selling, several stocks escaped the mayhem, with 133 of them clocking double-digit returns, and one turning a multibagger!

Jubilant Industries gave 113% returns last month, while Kalyani Steels, BF Utilities, Sanghvi Movers, Jindal Worldwide, and SML Isuzu rallied over 40-60%.

Near-term Outlook

Analysts and market experts have retained their cautious outlook on smallcap stocks, and expect some more correction in this space.

“I would be cautious in the midcap and smallcap sectors, particularly considering the SEBI directive and the worries expressed regarding the accumulation of foam in these markets…It's wise to evaluate risk exposure and take diversification techniques into consideration given the probability of slowing in fund inflows and portfolio rebalancing,” said Ashish Kumar, smallcase manager and founder of Stoxbazar.

(Data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)


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(You can now subscribe to our ETMarkets WhatsApp channel)

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Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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