Nifty MidCap100, SmallCap100 turns in bear territory; falls over 20% from high

BSE Sensex & Nifty50

The Nifty MidCap100 and Nifty SmallCap 100 indices entered bear market territory this morning as indices opened lower again, driven down by global markets.

The Nifty MidCap 100 hit a record high of 33,243.50 points on October 19, 2021. It has fallen 20.18 per cent since then. The Nifty SmallCap100 is down nearly 21 percent from its January 18, 2022, all-time high of 12,047.45 points.

A bear market is confirmed when an index sinks 20 percent or more below its most recent closing high. The Sensex and Nifty have shed 15 percent from those peak levels.

At 11.45am, the Nifty Midcap 100 was down 2 percent at 26,966 points while the Nifty SmallCap had shed 1.7 percent to 9585 points.

The fall was after news reports suggested the US and its European allies were considering a ban on Russian oil.  Brent crude rose above $130 per barrel in early trade, the most since 2008.

“The extraordinary uncertainty triggered by the war has pushed commodity markets into turmoil. Crude at $ 128 is a big shock. This can impact global growth and aggravate inflationary pressures. In India, growth will be lower and inflation higher than projected for FY23,” said   V K Vijayakumar, chief investment strategist at Geojit Financial Services.

“The market is slipping into bearish territory. Investors have to be cautious. There is relative safety in energy due to high energy prices, metals due to high global prices and export segments due to resilient demand and rupee depreciation. Calibrated buying in very small quantities may be considered in the above-mentioned segments,” Vijayakumar added.

Analysts say the escalation of the conflict and its consequent global economic fallout weighed on investor sentiment. Foreign investors continued their selling spree and have pulled out over Rs 2 lakh crore since October.

In the coming week, in addition to geopolitical tensions, investors will look at state election exit poll data and the global market on Bank of England and US Federal Reserve policy statements.

“Based on current consensus, state elections outcome is unlikely to be a crucial factor but rather a short-term positive and negative reaction, accordingly. Due to war uncertainties, central banks may balance their hawkish policy against expected earlier due to high inflation,” said Vinod Nair, head of research at Geojit Financial Services.