Rs 98k-cr selloff by FIIs in Oct drags Mid, SmallCap indices 9% in 7 days

FIIs have offloaded Indian equities worth a total of Rs 98,086 crore on the stock exchanges till October 24, data from NSDL showed

Shares of midcap and smallcap companies are under pressure for the second straight day, with their indices falling around 2 per cent on the BSE in Friday’s intra-day trade.  The constituent stocks of the two broader market indices were weighed down by continued selling from foreign portfolio investors (FPIs) of nearly Rs 1 trillion. The decline is attributed due to a weaker-than-expected September quarter (Q2) corporate earnings.

 

The BSE MidCap and BSE SmallCap indices slipped 2.3 per cent and 1.8 per cent, respectively, in intra-day trade today. In the past seven trading days, the smallcap index has tanked 9 per cent, while the midcap index has plunged 7 per cent. In comparison, the BSE Sensex was down 2.3 per cent during the same period.

 

 

In the current month, up to October 24, FPIs have offloaded Indian equities worth a total of Rs 98,086 crore on the stock exchanges, data from NSDL showed. During the same priod, domestic institutional investors (DII) have made net purchases of Rs 92,932 crore.

 

Bliss GVS Pharma, Suryoday Small Finance Bank, Platinum Industries, Grauer & Weil (India), Matrimony.com, Nalwa Sons Investments, Glenmark Life Sciences and Chennai Petroleum Corporation from the smallcap index tanked in the range of 7 per cent to 14 per cent.

 

Apart from that, Dixon Technologies, AU Small Finance Bank, Bharat Heavy Electricals, Bandhan Bank, Go Digit General Insurance and One 97 Communications-- the parent of Paytm, from the midcap stocks shed between 5 per cent and 10 per cent.

 

Moreover, IDFC First Bank, Relaxo Footwear and Zee Entertainment Enterprises from the midcap index hit their respective 52-week lows. A total of 56 stocks from the smallcap index, including Everest Industries, Ideaforge Technology, ITI, New Delhi Television (NDTV), RBL Bank, PSP Project, Sanghi Industries, Trident and Ujjivan Small Finance Bank also hit their 52-week lows on the BSE.

 

“Global equities also edged lower amid tepid trading ahead of the US elections. Meanwhile, gold prices retreated from record highs due to a strengthening US dollar. Concerns regarding geopolitical tensions in the Middle East and Europe have further fuelled demand for safe-haven assets. As the market navigates these challenges, investors remain cautious amid uncertain economic conditions,” said Vikram Kasat, Head - Advisory, PL Capital - Prabhudas Lilladher.

 

Another worrying factor for the markets, analysts said, is the sticky inflation and the Reserve Bank of India's (RBI's) move to keep rates steady, at least for now. Demand conditions, they believe, remain uncertain and prolonged rains and floods have affected growth in the September 2024 quarter (Q2 FY25). CLICK HERE FOR FULL DETAILS

 

However, according to CARE Ratings, GDP growth slowed to 6.7 per cent in Q1FY25 due to reduced government spending amid election-related restrictions, but private consumption and investments witnessed growth during the quarter. 

 

Despite a healthy growth in Q1, recent high-frequency indicators such as car sales and IIP growth suggest softening in the economy over the past few months. However, a favourable monsoon is expected to support farm income and bring down pressures on food prices. In the second quarter, the ratings agency has forecasted the economy to grow by 7 per cent.

 

There was a slowdown in the growth of bank credit to the NBFC segment (11.9 per cent as of August 2024 from 21.3 per cent a year earlier) and the personal loans segment (16.9 per cent versus 18.3 per cent), due to increased risk weightage for these segments.

 

Meanwhile, industrial credit offtake improved significantly, rising to 9.8 per cent (Y-o-Y) as of August 2024, compared to 5.3 per cent a year ago. Credit disbursements to large enterprises (constituting a share of 72 per cent in the total industrial credit) improved with a growth of 7.7 per cent as of August 2024 compared to a growth of 4.3 per cent a year ago.

 

“Overall, we expect GDP growth to remain healthy at 7 per cent in FY25, supported by improvements in domestic consumption and investment,” CARE Ratings said while announcing its Q2 earnings on Wednesday.