INSUBCONTINENT EXCLUSIVE:
Investors are choosing to put their money in large-cap stocks these days rather than mid- and small-caps, a sea change from the situation
Board of India(Sebi) data, the contribution of top 50 companies (by market cap) for overall market volumes has increased to 58 per cent in
October from 35-40 per cent during the last financial year when mid-cap stocks decisively outperformed large caps.
Analysts said the
sell-off in mid- and small-cap shares in the last few months has dented the sentiment and driven away investors from that space.
The scales
look even more titled if the data were to be expanded to top-100 companies, which now contribute to 75 per cent of overall cash market
the blue-chip index, Sensex, has outperformed mid-cap and small-cap indices this year
While the Sensex has gained 5 per cent in 2018, the BSE Midcap and Smallcap indices have lost 16 per cent and 25 per cent, respectively.
The
lackluster performance of mid-cap and small-cap stocks comes after three successive years of bull run in the space that had resulted in
valuations turning expensive
Gaurang Shah, chief investment strategist, Geojit Financial Services
to the weakness as most of the NBFCs come under the mid-cap category.
Regulatory action in the form of trading restrictions and enhanced
surveillance has also added to the pain in the segment, say experts
Capital market regulator Sebi introduced several measures in the last few months to curb excessive speculative trading, both in cash and
(ASM) for stocks that were showing extraordinary price swings
Stocks under this mechanism will be subject to 5 per cent price filters i.e if the stock moves up or down 5 per cent, trading activity in
the stock will be halted for the rest of the session
Currently over 80 stocks are under these restrictions
Measures such as graded surveillance, mandatory physical settlement for certain stocks in derivatives market are among the other changes
that impacted the volumes, say experts.
However, brokers also point out that not all mid-cap and small-cap stocks are bad trading choices
