Small stocks take big hit, lose to blue-chips in New Year

Delhi: Small and mid-cap indices of the BSE have underperformed compared to their bigger peer so far this month, as the two indices fell up to 10 percent, against over 6 percent decline in the 30-stock Sensex.

While the mid-cap index plunged by 8.52 percent to 10,217.05, losses were more sharper in the small-cap index which fell by 9.62 percent to 10,697.91.

In comparison, the benchmark Sensex dropped by 6.24 percent to 24,485.95. The index hit its one-year low level of 23,839.76 on January 20.

The mid-cap index too touched historical low of 9,892.36 on January 20.

Market experts said that small and mid-caps tend to suffer more during times of uncertainty.

Sentiment in the domestic market was hit mostly by renewed global sell-off on worries driven by volatility in crude oil which slid below USD 28 per barrel, concern over the health of the Chinese economy, while domestic macroeconomy also contributed the fall with Rupee slumping over 28-month low, along with muted earnings of some of the corporates.

 

On Dalal Street, 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 percent.

In 2015, the BSE benchmark Sensex fell by 1,381.88 points, or five percent, after gaining nearly 30 percent in 2014.

"Currently, investors are in a wait and watch mode as going forward global triggers will shape the market direction as per the outcome of Fed and BoJ meet this week," said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services Ltd.

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.