Steep fall in Indian equities dashes the hopes of mid-, small-cap recovery

The steep fall in Indian equities on Monday has dashed the hopes of broad-based recovery in the market. The Nifty MidCap Index and the SmallCap Index have now come off nearly 20 per cent from their 2020 highs.

Many brokerages and fund houses were expecting a more broad-based rally this year, after acute polarisation in the markets over the past two years. Experts believed that valuations of mid- and small-caps had slid to reasonable levels, limiting further downside, and raising hopes of gains in quality names.

This optimism was reflecting in the stock price as the mid-cap and small-cap indices outperformed benchmark