Mid, SmallCap indices dip 4% each; LIC Housing, IRFC, CG Power tank over 5%

Tata Tech from the midcap index and Equitas SFB, Kolte Patil Developers, Landmark Cars, Nilkmal, Spandana Sphoorty and Tasty Bite from the smallcap index hit their respective 52-week lows

Mid-cap, small-cap stocks fall on Monday: Shares of mid-cap and small-cap companies came under heavy selling pressure on Monday, August 5. The mid and small-cap stocks fell up to 17 per cent on the BSE in Monday's intraday trade on the back of weak global cues.

The BSE MidCap index and BSE SmallCap index dropped 3.8 per cent each in the intraday trade. These indices have corrected 6 per cent from their respective record highs touched on July 31. At 09:33 AM, the BSE MidCap and BSE SmallCap index were down 2.6 per cent and 3.1 per cent, respectively. In comparison, the BSE Sensex was down 1.9 per cent at 79,493.

 

Tata Technologies from the MidCap index, and Equitas Small Finance Bank, Kolte Patil Developers, Landmark Cars, Nilkmal, Spandana Sphoorty Financial, and Tasty Bite Eatables from the SmallCap index hit their respective 52-week lows on the BSE.

Nucleus Software Exports, Archean Chemical Industries, Sudarshan Chemcial Industries, The Phoenix Mills, Keystone Realtors, and Himatsingka Seide from the SmallCap index, meanwhile, tanked between 10 per cent and 17 per cent in the intra-day trade.

Samvardhana Motherson International, LIC Housing Finance, Bharat Forge, Godrej Properties, and Steel Authority of India (SAIL) from the MidCap index, on the other hand, slipped in the range of 6 per cent to 9 per cent.

Asian markets were deep in the red this morning, with Japan's Nikkei and South Korea's Kospi average falling over 5 per cent each, along with a drop in US futures, following a significant increase in the US unemployment rate to a nearly three-year low. 

The Nasdaq Composite slipped into a technical correction last Friday (August 2) amid concerns that the US Federal Reserve might have "made a severe error" by keeping rates too high for too long and could lead the US economy into a recession.

"The global market is reeling as bears enter with a cocktail of bad news. The fear of a reverse Yen carry trade, following an interest rate hike in Japan, was the initial catalyst. This was compounded by fears of a recession in the USA after extremely poor job data, which spooked market sentiment. China and Europe are already grappling with slowdowns, and escalating geopolitical tensions are adding further pressure on the markets," said Santosh Meena, Head of Research, Swastika Investmart.

We are witnessing signs of the first meaningful correction in global markets after an extended bull run. Investors and traders should be cautious and avoid rushing in immediately, as better entry levels may emerge, he added.

Meanwhile, the corporate earnings scorecard for June 2024 quarter (Q1FY25) has been in-line so far, with heavyweights such as HDFC Bank, Tata Motors, ICICI Bank, Maruti, and TCS driving the aggregate. The growth has primarily been led by the BFSI and Auto sectors. The Nifty is trading at a 12-month forward P/E of 21x, at a 3 per cent premium to its own long-period average (LPA).

Industrials and Capex, Consumer Discretionary, Real Estate, and PSU Banks are r key preferred investment themes, Motilal Oswal Financial Services said. The brokerage firm remains overweight on PSU Banks, Consumption, Industrials, and Real Estate.