Moneycontrol
Last Updated : Jun 11, 2018 10:06 AM IST | Source: Moneycontrol.com

250 smallcaps hit fresh 52-week lows in June; what should investors do now?

As many as 249 stocks in the BSE Smallcap index hit a fresh 52-week low in June. These include: Kwality, Deep Industries, JBF Industries, Videocon, Manpasand Beverages, KSK Energy Ventures and Arrow Greentech.

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In 2017, smallcaps posted huge returns but the same came in small sizes. In 2018, things have slightly reversed. There is carnage in the midcap and smallcap space, which produced the maximum numbers of multi-baggers last year.

In the past six trading sessions, the BSE Smallcap index lost 2.1 percent while the BSE Midcap index rose 0.06 percent. In the same period, the Sensex gained 0.34 percent.

As many as 249 stocks in the BSE Smallcap index hit a fresh 52-week low in June. These include: Kwality, Deep Industries, JBF Industries, Videocon,

Manpasand Beverages, KSK Energy Ventures and Arrow Greentech.

Most smallcap stocks topped the losers list on a weekly basis. Stocks that lost up to 26 percent on a week basis include: Kwality (down 26 percent), Deep Industries (down 24 percent), and Arrow Greentech (down 22 percent).

Only 9 stocks in the BSE Smallcap index managed to buck the trend and hit a fresh 52-week high. These include: Merck, KPIT Technologies, Varun Beverages, Sundaram Fasteners, Astral Poly Technik, Pfizer, Take Solutions, VIP Industries and Firstsource Solutions.

Most smallcaps have taken a beating not just in June but year-to-date as well. Experts advise investors to stay away and avoid bottom fishing as the correction in this space could continue.

“We witnessed a huge carnage in many mid-, small- and few largecap stocks in the last couple of months. Though many stocks are trading near their 52-week lows, this is not an ideal market for bottom fishing,” Jay Purohit, Technical & Derivatives Analyst at Centrum Broking, said.

He advises investors to remain selective while stock picking. “Wait for a strong reversal signal before initiating fresh long positions in beaten down counters. From the last few months, we are witnessing stock-specific moves in the market. Hence, traders are advised to adopt a stock-specific approach with proper risk management.”

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High valuations, reclassification of mutual fund portfolios as mandated by Sebi, persistent selling by foreign institutional investors (FIIs) and the recent rules introduced by exchanges’ to curb speculation has sparked panic across these segments.

Last week, the BSE decided to place 109 companies under enhanced surveillance. The move is aimed at checking any abnormal rise in stock prices that are not commensurate with their financial health.

Over the weekend, the National Stock Exchange (NSE) too decided to introduce additional surveillance measures on 60 companies that are undergoing insolvency resolution process (IRP) as per the Insolvency and Bankruptcy Code (IBC).

As many as 102 stocks on the BSE 500 index hit fresh 52-weeks low so far in June. These include: Aban Offshore, ABB India, ACC, Adani Power, Ajanta

Pharma, Rallis India, JK Tyre & Industries, Gati, Force Motors, Bharat Heavy Electricals, Indo Count Industries, Indiabulls Real Estate, Birla Corporation, Avanti Feeds and Cummins India.

“The market breadth has been weak for quite some time. A number of stocks, especially from the broader market, are in a downtrend from a short term as well as long term perspective,” Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan by BNP Paribas, said. He advises staying away from these stocks. “Those who are still holding on to these tumblers should be looking to get rid of them.”
First Published on Jun 11, 2018 10:06 am
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