Pain in PSBs, NBFCs, pharma stocks: Mid, smallcaps lose a bit of shine
Shares of smalland mid-cap companies, best performers in the past four years, have given up a portion of their gains in recent sessions as investors are cutting positions in richly-valued firms.
Nearly 70 of the BSE 500 stocks have declined between 20% and 70% from their highs in 2017, whereas about 200 stocks corrected between 10% and 20%. Analysts said earnings in the fourth quarter have disappointed, prompting investors to sell in this segment.
“Mid & small-cap stocks have rallied ahead of their fundamentals and now as their results are not justifying their valuations, investors started booking profits," said Sanjiv Bhasin, executive VP market, IIFL.
While Sensex has declined 1% from its 2017 high, both BSE Midcap and Smallcap indices have dropped nearly 6% from their 2017 highs. The pain is concentrated in state-owned banks, non-banking financials and pharma stocks.
The sharp rally in mid-cap stocks fuelled by the uninterrupted flush of funds from domestic mutual funds and high networth investors has made their price-to-earnings (PE) hit an all-time high -even at a premium to large caps. Since January 1, 2016, mutual funds have invested over Rs 73,000 crore into stocks while foreign institutional investors pumped in nearly Rs 70,000 crore.
Nearly 70 of the BSE 500 stocks have declined between 20% and 70% from their highs in 2017, whereas about 200 stocks corrected between 10% and 20%. Analysts said earnings in the fourth quarter have disappointed, prompting investors to sell in this segment.
“Mid & small-cap stocks have rallied ahead of their fundamentals and now as their results are not justifying their valuations, investors started booking profits," said Sanjiv Bhasin, executive VP market, IIFL.
While Sensex has declined 1% from its 2017 high, both BSE Midcap and Smallcap indices have dropped nearly 6% from their 2017 highs. The pain is concentrated in state-owned banks, non-banking financials and pharma stocks.
The sharp rally in mid-cap stocks fuelled by the uninterrupted flush of funds from domestic mutual funds and high networth investors has made their price-to-earnings (PE) hit an all-time high -even at a premium to large caps. Since January 1, 2016, mutual funds have invested over Rs 73,000 crore into stocks while foreign institutional investors pumped in nearly Rs 70,000 crore.