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The BSE mid-cap and small-cap indices have underperformed compared to bigger counterparts in the first three months of this year, as the two indices fell up to 22%, as against about 4% decline in the 30-stock index, Sensex.
After recording smart gains last year, the mid-cap and small-cap indices reversed the trend mainly due to low participation from investors.
They had stolen the show last year with better returns than their large blue-chip peers, with the scrips appreciating by up to 40%.
While the mid-cap index of the BSE has tanked 14.66% since the beginning of 2013 till March, losses were sharper for the small-cap index which lost 22.11%.
In comparison, the fall in the 30 blue-chip barometer has been just 3.8%, as per the BSE records.
During the period, the BSE small-cap index fell to 1-year low of 5,708.41 on March 28, 2013.
Market experts said small and mid-caps tend suffer more in uncertain political and economic environment.
The Reserve Bank's cautious stance on key rate cuts and political uncertainty have left investors concerned about growth and prospect of additional fiscal reforms, they said.
"It is the retail investors who are the major participants in mid-cap and small-cap stocks and since last few months the retail segment activity in the market has shrunk," CNI Research CMD Kishore P Ostwal said.
"Most of the FII investment is there in the large-cap stocks. Going ahead, further fall is expected in the smaller stocks," he added.
Broadly, marketmen said, smaller stocks are bought by local investors, with overseas investors focusing on blue-chips.
Mid-cap index tracks the performance of companies with market value which on average is a fifth of blue-chips or large firms. Market values of small-cap firms are almost a tenth of that.
