Small and midcap selloff: Analysts have been flagging expensive valuations in the broader markets for some time, adding that investors should stay cautious in the space.
The Nifty Smallcap 100 index gained 1.36% to extend gains for the sixth consecutive session, while the Nifty Midcap 100 index rose nearly 1% to record gains for the fourth straight session.
Despite the strong surge, some analysts advice caution. 'While the potential for significant returns is evident, the risks are also heightened in this segment,' says Himanshu Srivastava from Morningstar Investment Research India.
The smallcap index ended in the green on seven out of past eight sessions, with the combined market capitalisation higher by over Rs 50,000 crore since May 23.
Midcap stocks also recorded strong gains to push the Nifty Midcap 100 index up 0.15 percent. However, the midcap index had dropped yesterday to close in the red with marginal losses, while smallcap index sailed through.
ICICI Pru CIO S Naren urged investors to protect gains made over the last five years, warning that mid- and small-cap stocks are highly overvalued. He recommended a diversified asset allocation strategy to manage risks.
On October 22, small- and mid-cap indices fell about 4% and 2.6%, respectively, underperforming the benchmarks and clocking their worst session since August 5
The five graphs explain the trends in the mid-cap space how mutual fund managers allocated investments to and benefited from those potential multibaggers.
Domestic heavyweight sectors such as banking and FMCG witnessed buying, spurred by foreign investments and expectations of monetary easing by the RBI in October.
Besides debt, commodities, and REITs & InvITs, multi-asset allocation mutual funds mainly invest in equities of different market capitalisation categories. Their allocation towards smallcap stocks has helped them deliver better returns
Prices of mid- and small-caps have risen, but they are not entirely driven by rise in earnings
Here's a list of smallcap stocks have seen a price erosion of up to 43 percent over the past year. While sum fund managers dumped these stocks, many continue to have them in their portfolios
Mid-cap companies are fairly established firms with an improving business model. Mid-cap mutual fund schemes can offer balanced growth while carrying a modest level of risk compared to large-cap and small-cap funds
The government’s initiatives to promote cultural and heritage tourism are expected to drive growth and create new opportunities for the sector. Here are the small-cap bets of the Nifty India Tourism Index Fund
These smallcap stocks that had been moving sideways for over two years have now begun to rise noticeably over the past two months
Over the past six months, equity mutual funds attracted record net inflows of Rs 1.66 lakh crore. Fund managers deployed the money in the beaten down quality stocks
In AMFI’s latest half-yearly rebalance of stocks, 23 stocks that were ranked below 500 in terms of market capitalisation have now graduated to become small-caps; ranked between 251 and 500
De Nora India bagged an order worth Rs 38.71 crore from Nuclear Power Corporation of India
As the market continues its record run, some smallcap stocks, including housing and infrastructure firms, have gained up to 848 percent in the past year, clocking big gains for mutual funds invested in these companies
With today's rise, the stock of this food grade antioxidants maker has surged over 21 percent in a week
Companies that have a high growth potential and return on equity command a higher Price-Earning ratio. That isn’t a bad thing, though. High PE might just indicate good future prospects
Frothy market valuation on midcap and smallcap segments has been a concern for the regulator and experts. However, market heightened valuation and volatility have not been a constraint parameter for active fund managers in adding quality midcap stocks to their portfolio
Market regulator Sebi wants mutual funds (MFs) to organise an investor protection framework for those investing in mid-and smallcap funds due to build-up of 'froth' in the space
Certain pockets in mid and smallcaps appear to be experiencing a favorable reassessment, others seem to be displaying signs of irrational exuberance, said SEBI chairperson Madhabi Puri Buch on March 11.
Kotak Mahindra Mutual Fund isn’t the first one to put restriction on its smallcap fund. SBI MF, Nippon India MF and Tata MF had earlier put restrictions on investments into their smallcap funds