The Hindu Business Line : Small & mid-cap stocks lose steam

Chennai, Jan. 8 Small- and mid-cap stocks, till now the darlings of market men, have lost steam at the bourses since the dawn of New Year. The BSE Sensex, which climbed the 21-K mark for the first time in its history today, has posted a return of 2.6 per cent since January 1, while the NSE’s S&P CNX Nifty and the BSE-500 indices have generated a return of 2.4 per cent. In comparison, the BSE Small-Cap index gave out a return of 0.48 per cent and the BSE Mid-cap is marginally in the negative.

Circuit summary

Tuesday’s circuit summary clearly captured the change in the mood of investors. About 800 stocks, 797 stocks to be precise, have hit lower circuit filter on the BSE, against 255 stocks that hit the upper circuit on Tuesday. Total traded stocks on the BSE on Tuesday were 2,928. The data is a contrast when compared to the statistics a few days ago, when the number of stocks hitting the upper circuit has been consistently in excess of 1,000, while that of lower circuit filter stocks had been in the range of 20-50.

A stock hitting lower circuit means there are only sellers for the stock and no buyers.

Three hundred and twenty one stocks from the T group hit the lower circuit, followed by B2-group, which accounted for 226 stocks. Three stocks – National Fertiliser, MIRC Electronics and Rashtriya Chemicals & Fertilisers, have hit the lower circuit from the A-group.

Total number of traded stocks on the T-group was 592, which means about 38 per cent of the T-group stocks hit the lower circuit.

According to brokers, the stocks that have witnessed a sharp run-up in the prices are facing a sell-off on account of profit booking. Besides, global jitters have also unnerved retail investors, who predominantly own these stocks.

According to Mr Sailav Kaji of PINC Research, “These stocks are in the correction mode, as they had a sharp up-move recently.”

“The mid- and small-caps, which have highest retail participation, have been doing extremely well for the last two months. Therefore, when they corrected, the impact has been widespread. It appears that this cannot be the end of the rally,” according to Mr Arun Kejriwal of KRIS Securities.

Retail investors need to watch their step in the days ahead as they are likely to be the worst affected if the mid and small cap stocks start correcting in earnest.

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