Market fall: BSE Smallcap index tanks 7% in 1 week; 50 shares at 52-wk low

The BSE Smallcap index slipped 2.5% or 1,346 points to 52,258 in Wednesday's intra-day trade and down 6.7% in the past one week as sustained FIIs selling and earnings disappointment weighed.

SmallCap shares were under pressure for the fifth straight day on the bourses, with the BSE SmallCap index down nearly 7 per cent in the past one week after companies reported a weak set of earnings for the quarter ended September 2024 (Q2FY24).

 

The BSE SmallCap index slipped 2.5 per cent or 1,346 points to 52,258 in Wednesday’s intra-day trade. In the past one week, the index has tanked 6.7 per cent, as compared to 2.7 per cent decline in the BSE Sensex.

 

However, at 10:49 am; SmallCap index had partially recovered from the day’s low, and was down 1.6 per cent or 859 points at 52,745. In comparison, the BSE Sensex and BSE MidCap indices were down 0.5 per cent and 1.4 per cent, respectively.

 

A total of 50 stocks from the SmallCap index including the likes of Bajaj Electricals, Birla Corporation, Equitas Small Finance Bank, Gujarat Narmada Valley Fertilizers & Chemicals (GNFC), JK Lakshmi Cement, RBL Bank, PNC Infratech and Ujjivan Small Finance Bank hit respective 52-week lows in today's trade.

 

BASF India, Antony Waste Handling Cell, Vishnu Chemicals, Bharat Bijlee, IIFL Securities, Advanced Enzyme Technologies, Matrimony.com and Electronics Mart market price declined more than 20 per cent in the past one week.

 

The current market fall in equities due to sustained selling by overseas funds and sharp losses in index heavyweights, which weighed on market performance. Earnings disappointments and more attractive investment prospects in the US also kept investor sentiment subdued.

 

Meanwhile, headline CPI inflation came in at 6.2 per cent year-on-year (YoY) in October, the highest in 14 months and higher than market consensus of 5.9 per cent.

 

Current trends suggest that inflation in the second half of FY25 may exceed the Reserve Bank of India’s (RBI) October projections, potentially delaying the start of a rate-cutting cycle. With headline inflation above the upper end of the RBI's tolerance band, the MPC will remain cautious and is likely to maintain status quo on policy rates in the December meeting, said Rajani Sinha, Chief Economist, CareEdge Ratings.

 

Meanwhile, from the emerging market perspective, the rise in the dollar index and the sharp spike in the US 10-year bond yield to 4.42 per cent are causes of concern. Such high yields in US bonds will facilitate more outflows from emerging markets to the US. This will continue to be a headwind for India.

 

Investors should be cautious in investing in sectors like cement, metals and petroleum refining which are facing growth slowdown. Safety is sectors like banking, new age digital companies, hotels, pharma and IT where growth prospects are good, said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

 

Among individual stocks, Fairchem Organics hit a 52-week low of Rs 872, as the stock plunged 12 per cent on the BSE after the company reported 61 per cent year-on-year (YoY) decline in profit after tax (PAT) at Rs 4.01 crore in Q2FY25. The specialty chemicals company had posted a PAT of Rs 10.29 crore in year ago quarter. Revenue from operations was down 8.9 per cent YoY at Rs 138.61 crore.

 

Shares of Greaves Cotton plunged 10 per cent to Rs 161 after the company’s earnings before interest, tax, depreciation, and amortization (ebitda) halved to Rs 23 crore in Q2FY25 from Rs 46 crore in Q2FY24. Margins contracted to 3.3 per cent from 6.3 per cent in a year ago quarter. Income from operations dipped by 3 per cent YoY at Rs 705 crore.

 

Shares of PNC Infratech too hit a 52-week low of Rs 297, down 7 per cent on the BSE in Wednesday’s intra-day trade. The stock of civil construction company corrected 48 per cent from its 52-week high of Rs 574.50 touched on May 27, 2024.

 

Having bagged orders worth Rs 4,630 crore in Q1, the company had guided for further order inflows of Rs 8,000 crore in FY25. However, given the company’s recent disqualification from participating in any tender process by the Ministry of Road Transport and Highways (MoRTH) for a period of one year, for orders, it will have to depend on state highways and non-road segments for order inflows wherein the risks of aggressive bidding and not winning enough orders to meet growth remain, according to ICICI Securities. The brokerage firm said it awaits management’s commentary on order inflows and growth outlook going ahead.