Small stocks lag behind, take bigger hit than blue-chips

Small and medium companies of BSE have taken a bigger hit compared to their bigger peers amid extreme weakness in the broader market as the two indices has cracked by up to 16.5% against 9% decline in the 30-stock Sensex so far this year.

While the mid-cap index fell by 12% to 9,802.77 points, losses were more sharper in the small-cap index which plunged 16.56% to 9,876.53.

In comparison, the benchmark Sensex dipped by 9.22% to 23,709.15. The index touched its 52-week low of 22,600.39 on February 12.

The mid-cap and small-cap indices also hit their all-time low mark of 9,393.15 and 9,400.37, respectively, on February 12.
 
Sentiment was hit mostly by volatility in crude oil prices, concerns over the health of the Chinese economy and fears of a global slowdown.

Experts said domestic woes, including ballooning NPAs reported by the banks and weak quarterly earnings in various other sectors, have also added to the market weakness.

Sensex crashed by 807 points to drop below 23,000-mark on February 11, dragged down by concerns over global economy and mounting bad loans.

The mid-cap index is also down 15.97% from its all-time high of 11,666.24, while small-cap has come down by 19% from its record peak of 12,203.64.

The Sensex has also come off 21% from its all-time high of over 30,000, scaled on March 4, 2015.

In market terms, a fall of 20% from an all-time peak is considered to be as a 'bear market'.

The broader market performance is complete opposite to last year, where it was minnows who ruled in 2015 as mid-cap and small-cap stocks beat their blue-chip peers for the second year in a row with an average return of up to 7.4%.

In 2015, Sensex fell by 1,381.88 points, or 5%, after gaining nearly 30% in 2014.

Market players say smaller stocks are generally bought by local investors, while overseas investors focus on blue-chips.

The mid-cap index tracks companies with a market value that is on an average one-fifth of blue-chips or large firms. Small-cap firms are almost a tenth of that.