Mid- and small-cap companies have taken the hardest knock, with overseas investors exiting from these firms since the last week’s crash in US financial sector. Foreign insitutional investors (FIIs) have been pulling out their investments from India and other emerging markets to shore up resources to beat the global liquidity crunch.
FIIs sold off a large part of their holdings in mid- and small-cap companies after following Lehman Brothers filed for bankruptcy and Merrill Lynch was bought by Bank of America.
Interestingly, the Sensex stocks, which are more liquid and have a large overseas investor base, received fewer sell orders from FIIs, helping the Sensex to remain in the positive zone.A majority of the sales in the Sensex stocks were not executed through block deals as was the with mid- and small-cap scrips.
Morgan Stanley, Citigroup Global Markets, CLSA Mauritius, Deutsche Securities and Merrill Lynch Capital have sold over Rs 2,300 crore worth of shares in 37 Indian companies, according to the data available from stock exchanges.
Some of the mid-cap companies, including Anant Raj Industries, Gujarat NRE Coke, Electrosteel Castings, MIC Electronics, Usher Agro and Prithvi Information Solutions, have declined between 20 per cent and 36 per cent in the past one week.
The mid- and small-cap indices have declined by 5.6 per cent and 7.4 per cent in the last one week compared with a 0.30 per cent rise in the Sensex. As many as 80 per cent of the mid- and small-cap stocks saw a decline in prices compared with 53 per cent of the Sensex stocks bearing the brunt.
