MUMBAI: The decline that began in September due to a major explosion of overvaluations in small, mid-cap stocks in 2024 last year and a sustained selloff that began as a result of the capital markets regulator’s red flag against funds is now exacerbating the crisis. In this segment – small, mid-cap funds. Even though Sensex rose by more than 500 points today, the wealth of investors in small and midcap stocks reduced by Rs 2,02,191 crore in a single day.
It is known that the market has fallen due to the decline in fundamentals in small and mid cap shares of equity mutual funds i.e. ignoring the fundamentals and including shares of many companies in the investment portfolio at high prices.
After SEBI insisted on stress test for small and mid cap funds, it is learned that funds are now forced to report the number of days in which they will be able to return the money by selling 25 to 50 per cent, due to which they are nervous. of investments in case of redemption pressure from investors.
Small, mid-cap stocks have seen an extraordinary decline in prices over the last two months, with high net worth investors and the margin funding segment of the market getting attracted towards these funds. The panic selling seen in midcap and smallcap stocks today-Wednesday has become extraordinary.
The BSE Mid Cap Index fell to 42087.22 at one point and finally fell 519.62 points to close at 42647.77. Which has fallen by 7053.38 points i.e. 14.2 percent from its highest level of 49701.15 on September 24, 2024. Out of 132 midcap stocks traded today, 102 stocks declined, while 30 gained.
Even among small cap stocks, today BSE Small Cap Index fell to 50213.49 and finally fell by 807.86 points to close at 50906.76. Which has fallen by 6920.93 points i.e. 12 percent from the highest level of 57827.69 on December 12, 2024.
The market capitalization of BSE small cap stocks, which was Rs 73,15,825 crore on January 21, declined by Rs 1,20,470 crore to Rs 71,95,355 crore today. Whereas the market capitalization of BSE midcap shares which was Rs 65,22,240 crore on January 21, has decreased by Rs 81,721 crore to Rs 64,40,518 crore today.
