Rs 5 lakh crore wiped out in midcap, smallcap stocks in 2023; here’s what to expect from broader markets now
The combined market capitalisation of midcap and smallcap stocks listed on the NSE plunged by Rs 5 lakh crore amid the ongoing selloff in the domestic equity market in 2023. Data available with Ace Equity showed that the total market capitalisation of midcap and smallcap stocks retreated to Rs 79 lakh crore on March 13, 2023 against Rs 84 lakh crore on December 30 last year. Meanwhile, the Nifty Midcap 150 and Nifty Smallcap 250 indices cracked 4.29 per cent and 5.89 per cent, respectively during the same period.
In an interaction with Business Today, G Chokkalingam Founder, Equinomics Research and Advisory said broader indices may fall another 2-3 per cent. “At present, the liquidity appetite of retail investors is very weak. Hence, it could take a couple of months or even quarters for midcaps and smallcaps to rally,” he said.
On the other hand, Nifty 100 and Nifty 50 also retreated 6.90 per cent and 5.25 per cent, respectively on a year-to-date basis till March 13. Market watchers believe sustained outflows by foreign institutional investors and rising interest rates coupled with SVB collapse in the recent past weighted market sentiment.
Chokkaligam thinks that domestic markets would remain volatile in the short term but it is unlikely to fall badly. “Domestic economic factors remain conducive in relative terms. US Fed might postpone rate hikes temporarily to avoid further fall of US banks. The same could change global cues favourably,” he said adding it is time to move towards large cap stocks.
He advised investors to zero in on sectors like automobile, telecom, FMCG and private banks considering the present market scenario. For stock-specific investors, Chokkalingam suggested adding Maruti Suzuki, HDFC Bank Ltd, Reliance Industries Ltd and Titan at current market prices.
Shares of Maruti Suzuki traded 0.30 per cent down at Rs 8,492.25 in the afternoon trade at around 3 pm (IST) on March 14. On the other hand, the BSE Sensex was down 334 points, or 0.57 per cent, at 57,868. Reliance Industries was down 0.38 per cent at Rs 2,276, while Titan Company was up 0.75 per cent at Rs 2,352.35. Shares of HDFC Bank traded 0.41 per cent lower at Rs 1,562 at around the same time.
On the other hand, the combined market capitalisation of the top 100 companies on the NSE plunged nearly Rs 19 lakh crore to Rs 176 lakh crore on March 13, 2023 from around Rs 195 lakh crore on December 30, 2022. Heavy selling in Adani Total Gas, Adani Energy, Adani Green Energy, Adani Transmission and Reliance Industries alone wiped out Rs 10.76 lakh crore m-cap on a year-to-date basis.
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