BSE Smallcap index tanks over 6% in one week; 87 stocks hit 52-week lows

Shares of smallcap companies are under pressure, with the BSE SmallCap index falling nearly 3 per cent in Friday’s intra-day trade on concerns of softening economic growth and selling pressure from Foreign Institutional Investors (FIIs).

 

The BSE SmallCap index slipped 2.85 per cent in intra-day trade today. In one week, the index has fallen 6.5 per cent. In comparison, the BSE MidCap and the BSE Sensex are down 5.7 per cent and 2.7 per cent, respectively, during the week. At 10:27 AM, the BSE SmallCap index was down 1.9 per cent, compared to the 1.5 per cent decline in the BSE MidCap and the 0.33 per cent fall in the BSE Sensex.

 

 

Garware Hi-Tech Films, GTPL Hathway, Spandana Sphoorty Financial, Siyaram Silk Mills, The Anup Engineering, Apollo Micro Systems, Piramal Pharma, Senco Gold, Jai Corp and Titagarh Rail Systems from the BSE SmallCap index tanked between 6 per cent and 10 per cent.

 

As many as 87 stocks from the index hit their respective 52-week lows in intra-day trade today. The list includes PVR Inox, Apollo Pipes, Bajaj Consumer Care, Cello World, GMDC, Goodyear India, Hindustan Copper, Kolte-Patil Developers, Network18 Media & Investments, Route Mobile, Sterling and Wilson Renewable Energy and VRL Logistics.

 

FIIs were net sellers of over Rs 7,000 crore on Thursday, and their cumulative selling in the past seven trading sessions has exceeded Rs 19,000 crore, raising concerns in the market. Investor sentiment remains cautious ahead of the December quarter corporate earnings and amid concerns about fewer US rate cuts, Vikas Jain, Head of Research at Reliance Securities said.

 

"In the context of the looming uncertainty regarding President Trump’s likely actions, the market is unlikely to rally in the near-term. There appears to be no respite to the sustained FII selling which touched Rs 7,170 crore yesterday. This will continue to put pressure on the market,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

 

After the phenomenal growth since 2020, earnings have slowed in recent quarters. Banks, the largest weight in the listed universe, are struggling as stringent policy measures taken by the central bank in the past year have slowed demand for credit. Interest margins are under pressure as they compete to attract deposits. Growth in tech, India’s second largest sector, is weak because of a slow recovery in overseas demand. Though rural demand shows signs of recovery, consumption in urban areas is muted, analysts at HSBC Global Research noted.

 

Government capex has been weak but when it picks up, it would augur well for manufacturing sectors. Given the still elevated inflation, RBI has held off from cutting policy rates but has taken measures to relax liquidity. Pranjul Bhandari, HSBC Chief Economist, India and Indonesia, expects monetary policy easing to continue and forecasts two repo rate cuts of 25bp in February and April. Although foreign fund outflows have totalled $12 billion since September, 2024, demand from domestic investors remains resilient. Indian equities also provide strong defensive qualities against an otherwise uncertain global backdrop. The brokerage firm thinks the market is relatively insulated and could, to some extent, be a beneficiary of any change in trade policy by the incoming US administration.