The small and midcap indices sharply fell in the second half of the trading session on June 11, likely on profit booking, as shares catch breath after the recent rally that has several sessions of outperforming the benchmarks.
The Nifty Smallcap index dropped nearly one percent, snapping a seven-day gaining streak to mark the first time in June when the index was in the red, after rising nearly 6 percent so far this month.
The Nifty Midcap index fell 0.7 percent, breaking a five-day gaining streak that saw the index rise nearly 4 percent.
Analysts have been flagging expensive valuations in the broader markets, even as the broader market indices have staged a smart rally from March lows. "With valuations now running ahead of fundamentals in many pockets, investors should temper expectations and stay selective - focusing on quality names with sustainable earnings and reasonable pricing," Ajit Mishra, SVP of Research at Religare Broking recently said. The Nifty Smallcap 100 index is up almost 25 percent in last three months.
Nilesh Shah of Kotak Mahindra AMC too had flagged off elevated valuations in small and midcap shares, adding that they were trading much above their long-term averages.
Bombay Stock Exchange (BSE) were the top loser on the midcap index, dropping nearly 5 percent to trade at Rs 2,859 apiece. The shares of the stock exchange have now recorded their steepest single-day fall in over three weeks, after the stock was placed under the Additional Surveillance Measure (ASM) framework.
Bharat Dynamics (BDL), Cochin Shipyard and Mazagon Dock Shipbuilders shares meanwhile fell over 3 percent each. This comes as defence stocks consolidated after the recent bull run which was triggered by order hopes following 'Operation Sindoor'.
Motilal Oswal Financial Services shares fell over 4 percent, while L&T Finance, Hindustan Zinc, Solar Industries, HUDCO and Kalyan Jewellers dropped over 2 percent.
Other notable midcap stocks which recorded significant losses include Bank of India, Ola Electric Mobility, Indus Towers, Bank of Maharashtra, Federal Bank, Indian Bank and more.
On the smallcap index, Indian Energy Exchange (IEX) was the top loser. The shares of the company tumbled nearly 8 percent to trade at Rs 193 apiece. This came after reports claimed that Power Minister Manohar Lal plans to carry out a meeting with all stakeholders on benefits for market coupling.
Zen Technologies and Garden Reach Shipbuilders and Engineers (GRSE) shares dropped over 4 percent, in line with the other defence players. Radico Khaitan shares fell nearly 4 percent after Maharashtra's excise duty hikes.
Other notable smallcap stocks which recorded significant losses include Data Patterns, CDSL, Castrol India, FirstCry, Multi Commodity Exchange Of India (MCX), Angel One, BEML, Nuvama and more.
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