Extending their underperformance against the frontline stocks, mid and smallcaps continued witnessing selloff in intraday trade on August 11.
Equity barometer the Sensex fell about half a percent in morning trade while the BSE Midcap index fell more than 2 percent and the smallcap index cracked more than 3 percent.
At 1110 hours, the BSE Sensex was 0.47 percent down at 54,297 while the BSE Midcap and smallcap indices were down 1.88 percent and 2.83 percent, respectively.
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Nearly 700 stocks, all from mid and smallcap space, including Sequent Scientific, Trident, Salona Cotspin, RS Software, RSWM, Lyka Labs, Kingfa Science & Technology, Agarwal Industrial Corporation, Zee Media Corporation, Nahar Capital and Fairchem Organics, hit their lower circuits on BSE in intraday trade today.
The mid and smallcaps are witnessing panic selling after the BSE had introduced a new surveillance framework – Add-on Price Band Framework for certain stocks.
According to a press release, the stocks shortlisted will be subjected to additional periodic price limits viz. Weekly, Monthly and Quarterly price limits. These add-on price bands shall be in addition to the applicable daily price bands of such securities.
Besides, the recent outperformance of mid and smallcaps have also triggered a wave of profit-booking as concerns over rich valuation get stronger.
For some time, mid and smallcaps may continue underperforming the largecaps, experts said.
“Nifty’s strength is largely due to the resilience of high-quality financials, particularly the HDFC twins, ICICI Bank and Kotak Bank. This divergent performance is desirable and healthy since it is removing the froth in the broader market and rewarding quality. The underperformance of the broader market may continue,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
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