India’s small-, mid-caps post worst week in 15 months; blue-chips drop 2% each

BENGALURU: India’s small- and mid-cap stocks logged their worst week in 15 months on rising concerns of froth in the segments and as stress test results indicated a disparity in the durations that funds would take to liquidate their portfolios.

The small- and mid-caps dropped 5.5% and 4.66% this week, the biggest weekly drop since December 2022.

“The broader indexes will likely continue to face volatility on valuation concerns,” said Ajit Mishra, senior vice president of research at Religare Broking.

The stress test results of mutual funds, aimed at providing information on the number of days taken to fulfill redemption requests, showed wide disparity.

If an equity mutual fund takes longer than two or three days to return investors’ money, it could suggest stress in the portfolio.

“It is time to limit exposure in small- and mid-caps and wait for further clarity,” Mishra added.

Indian shares recoup some losses ahead of small-, mid-cap stress test results

The country’s blue-chip indexes – NSE Nifty 50 and BSE Sensex – lost about 0.6% each on the day, taking weekly losses to about 2%, their worst since Oct. 2023.

Barring information technology, all the major sectors logged weekly losses. Realty, energy and public sector banks were the worst hit, losing between 6.5% and 10%.

The top weekly sectoral losers were hit primarily due to excessive valuations after their sharp recent outperformance over the benchmarks, said Narendra Solanki, analyst at Anand Rathi Shares and Stock Brokers.

This is just a simple rationalisation of share prices that’s happening due to broader profit booking, added Solanki.

Oil marketing companies such as Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation tumbled between 3.6% and 6.5%, on Friday, hurt by petrol and diesel price cuts, ahead of an expected announcement of date for the national elections.

Paytm advanced 5% after the country’s payments authority granted the company a third-party application provider license.