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The renewed bull run in mid- and small-cap shares has come to an abrupt halt.
The selloff in the stock market in the last one week triggered by a global spread of coronavirus has resulted in these shares giving up all their gains of 2020.
The broader markets fell in line with the slump in the main benchmarks on Friday.
The BSE Mid-Cap index ended down 3.13 per cent at 14600.02 and is now down 2.45 per cent since January.
The BSE SmallCap index also fell in the red for the year 2020 intraday on Friday.
The index ended down 3.5 per cent at 13709.01 and is up 0.1 per cent for the year.
The BSE 500 index is down 6.6 per cent for the year.
In what has been the worst week for benchmark indices in over a decade, many mid- and small-cap stocks have declined in double digits.
Adani Transmission, Jindal Steel and L-T Finance Holdings fell 19-22 per cent in the week ended Friday.
Small-cap index constituents such as Future Consumer, Tejas Networks and Adani Gas fell 28-40 per cent.
Market strategists said the midand small-cap indices were gaining in January after being beaten down since January 2018 but the risk-averse sentiment in global markets has prompted investors to pull out of these segments and move to safe havens such as debt and gold.
The broader market gains were anyway suspect as India’s economic growth has been slowing down.
“The mid- and small-cap stocks were struggling because of the economic downturn in India.
Now, investors are taking a risk-off stance and they want to reduce exposure to risky assets, which means their appetite to hold equities is lower,” said Sanjeev Prasad, co-head, Kotak Institutional Equities.
“Their appetite to hold riskier mid- and small-cap companies is even lower.
They would still want to own some of the large-caps and better quality names,” said Prasad.
The mid- and small-cap indices are still marginally up in the last one year but are down 20-30 per cent from their all-time peaks they hit in January 2018.
The BSE Mid-cap index had hit a record high of 18321.37 on January 9, 2018 and the BSE Small-cap index had touched a lifetime high of 20183.45 on January 15, 2018.
Carnage on D-Street28 Feb, 2020Domestic equity indices witnessed one of the worst crashes in a single day on Friday as coronavirus scare sent equity investors scurrying for cover amid a global risk aversion and equity meltdown.
The virus has now invaded all six habitable continents.
US markets saw their worst fall in overnight trade as local governments started preparing to contain the spread of the virus in the country.
Indian indices followed suit, with Sensex tumbling over 1,100 points.
If the market sustains at this level till close of trade, it will be its third largest pointwise fall ever.Here we revisit some of the worst crashes in Sensex's history:August 24, 2015: 1,624 points28 Feb, 2020Sensex recorded its worst fall in history on a closing basis riding on a slump in Chinese markets and spooked by rising crude oil prices.
Shanghai shares slumped more than 8 per cent, leading to a worldwide rout on the ominous day.
BSE's market-cap fell by about Rs 7 lakh crore in a single day.
January 21, 2008: 1,408 points28 Feb, 2020The BSE flagship saw a 1,408-point plunge amid high volatility as investors panicked following weak global cues amid fears of a US recession.
During the session, it crashed to the day's low of 16,963, but later recovered to close at 17,605.
October 24, 2008: 1,070 points28 Feb, 2020The recession triggered by the 2008 global financial crisis which brought down Sensex from a high of 21,000 to 8,000 level in a span of 10 months was the reason behind its third biggest fall ever.
The 30-share pack fell nearly 11 per cent to close at 8,701.
NSE barometer Nifty had crashed 13 per cent on that day.
February 1, 2020: 988 points28 Feb, 2020The fourth biggest crash for the index came in this day.
Some of the announcements made in the Union Budget by Finance Minister Nirmala Sitharaman did not go down well with investors and they rushed to withdraw money.
Market strategists believe that the broader market will continue to weaken as the appetite for equity wanes until there is clarity on the extent to which coronavirus is likely to weigh on global growth.
“This is a completely globalised trend as all major markets have corrected by the same magnitude.
While it is anybody’s guess how the coronavirus impact plays out, we may see some stability in the main index as it has corrected by 9-10 per cent but global news flow and FII selling have to stabilise first,” said Rajat Rajgarhia, CEO-institutional equities at Motilal Oswal.
“Benchmark indices have to stabilise first for the broader market to see calm,” said Rajgarhia.
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