Nifty Smallcap index extends losses to 9th straight day as valuation concerns weigh; Zen Tech, IEX, GRSE slide up to 5%

Zen Tech, IEX, GRSE decline up to 5% as Nifty Smallcap index extends losses to 9th straight day.

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The Nifty Smallcap index extended its losing streak to a ninth consecutive session on July 29 as concerns over elevated valuations prompted investors to pare exposure to smaller companies.

The index, which began its slide on July 17, has declined more than 6 percent over the nine-session period.

During Tuesday’s trade, the Nifty Smallcap index slipped up to 0.62 percent. Among the major laggards, Zen Technologies hit the 5 percent lower circuit, quoting at Rs 1,606.2 on the NSE.

Indian Energy Exchange (IEX), Poonawalla Fincorp, and Delhivery were also under pressure, shedding 3.66 percent, 3.58 percent, and 2.75 percent, respectively.

Market participants attributed the continued sell-off to profit booking and caution around valuation levels in the broader market.

Ruchit Jain, Vice President at Motilal Oswal Financial Services, said the Nifty Small Cap index formed a negative divergence along with the RSI around recent highs. Technically, such structure indicates weaking momentum which is usually followed by corrective phases.

"The Nifty Small Cap index has thus seen a corrective phase in last few days, however the longer term trend remains intact. The index is expect to take support around 16900 – 16800 range which is the 89 DEMA support. We advise traders to keep a buy on dip approach and look for buying opportunities near the support, but be selective in stock picking," he added.

Other stocks that saw intraday losses of up to 3 percent included Garden Reach Shipbuilders & Engineers (GRSE), RITES, MCX, NBCC and BEML.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.