Smallcap, midcap indices tank up to 3% as profit booking begins after Nifty hits record high
ETMarkets.com
Synopsis
The selloff in small and midcap stocks is in contrast to lacklustre trade in Nifty and Nifty Bank. Nifty PSU Bank lost over 1% with Punjab and Sind Bank, UCO Bank and Maharashtra Bank leading the downside with a 5% fall.
By ETMarkets.com
A day after Nifty scaled new peaks above the 20,000-mark and domestic brokerage firm Kotak Institutional Equities dropped its recommended midcap portfolio citing irrational exuberance in the broader market, profit booking began in small and midcap stocks on Tuesday.
Shares of Cochin Shipyard, GRSE and Mazagon Dock lost between 6-7% each while rail stocks RVNL, Jupiter Wagons and Titagarh Wagons dropped between 4-6% each.
The selloff in small and midcap stocks is in contrast to lacklustre trade in Nifty and Nifty Bank. Nifty PSU Bank lost over 1% with Punjab and Sind Bank, UCO Bank and Maharashtra Bank leading the downside with a 5% fall.
Market experts have been warning investors to avoid the frothy segments of the mid- and smallcaps after a meteoric rise in many pockets.
"We see limited point in trying to find fundamental reasons behind the steep increase in stock prices of several mid-cap. and small-cap. stocks. There is no meaningful change in the fundamentals of most companies; in fact, they have worsened in many cases. The primary driver of the rally appears to be irrational exuberance among investors, with high return expectations (and purchase decisions) being driven by the high returns of the past few months," Kotak Equities had said.
The brokerage had on Monday dropped its recommended midcap portfolio saying they cannot find too many stocks beyond the BFSI space that offer decent potential upside.
"The valuations of stocks in our favorite capital goods, healthcare, QSR and real estate sectors discount growth for the next few years and leave absolutely no room for any disappointment," Kotak's Sanjeev Prasad said, adding that the last lot of the new favorite mid-and-smallcap stocks fall in the dubious category of ‘turnaround’ stories.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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Nifty's small and midcap indices lost up to 2-3% each with Indiabulls Real Estate, Infibeam and RITES leading the downside by dropping around 8% each. High-flying PSU stocks from railways and defence were among the top losers in today's sell-off.Shares of Cochin Shipyard, GRSE and Mazagon Dock lost between 6-7% each while rail stocks RVNL, Jupiter Wagons and Titagarh Wagons dropped between 4-6% each.
The selloff in small and midcap stocks is in contrast to lacklustre trade in Nifty and Nifty Bank. Nifty PSU Bank lost over 1% with Punjab and Sind Bank, UCO Bank and Maharashtra Bank leading the downside with a 5% fall.
Market experts have been warning investors to avoid the frothy segments of the mid- and smallcaps after a meteoric rise in many pockets.
"We see limited point in trying to find fundamental reasons behind the steep increase in stock prices of several mid-cap. and small-cap. stocks. There is no meaningful change in the fundamentals of most companies; in fact, they have worsened in many cases. The primary driver of the rally appears to be irrational exuberance among investors, with high return expectations (and purchase decisions) being driven by the high returns of the past few months," Kotak Equities had said.
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The brokerage had on Monday dropped its recommended midcap portfolio saying they cannot find too many stocks beyond the BFSI space that offer decent potential upside.
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"The valuations of stocks in our favorite capital goods, healthcare, QSR and real estate sectors discount growth for the next few years and leave absolutely no room for any disappointment," Kotak's Sanjeev Prasad said, adding that the last lot of the new favorite mid-and-smallcap stocks fall in the dubious category of ‘turnaround’ stories.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
