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Shares of mid-and small-cap companies came under selling on Friday, falling by up to 11% on the BSE after oil prices hit their highest level in nearly nine months, as escalating civil war in Iraq hit risk appetite.
Brent crude climbed to a nine-month high near $114 a barrel on Friday, as supply disruption fears took centre stage after the United States threatened military action in Iraq against Sunni Islamist militants who are pushing on towards Baghdad, the Reuters report suggests.
The S&P BSE Small-cap index has lost 3.1% or 311 points at 9,674, while S&P BSE Mid-cap index plunged 2.5% or 230 points at 8,936.
Among individual stocks, MTNL, ITI, Patel Engineering, Uflex, D B Realty, Sintex Industries, NRB Bearings and Alembic from small-cap index tanked more than 8% each. HMT, JM Financial, Essar Ports, Shipping Corporation of India, Uco Bank, HDIL, Future Retail and Hindustan Copper slipped between 6-9%.
Most of the mid-and small-cap stocks had outperformed the market in past one month after the Narendra Modi-led Bharatiya Janata Party (BJP) won a decisive election mandate. Since May 16, the mid-cap and small-cap indices have rallied 18% and 27% respectively, compared to 6% rise in benchmark S&P BSE Sensex till yesterday.
Meanwhile, shares of all three listed state-owned oil marketing companies – Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) – ended lower by 5-8% amid fears of a rise in under-recoveries given the rising crude oil prices.
