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Smallcap Stocks: Shares of small companies gave a big blow to investors, 13% fall so far this year

BSE’s Smallcap index has lost 3,816.95 points or 12.95 percent and Midcap 2,314.51 points or 9.26 percent so far this year.

Smallcap Stocks: Amidst the fall in the stock markets, the performance of small companies this year has been weaker than big companies. BSE Smallcap and Midcap have lost 13 percent so far this year. This year, their performance in comparison to the Sensex has been very poor. However, experts say that in ‘good times’, shares of small companies climb more than ‘large caps’. In such a situation, ‘correction’ is normal in these bad times. This year has not been good for the stock markets amidst geo-political tensions, inflation concerns and heavy selling by foreign funds.

BSE’s Smallcap index has lost 3,816.95 points or 12.95 percent and Midcap 2,314.51 points or 9.26 percent so far this year. In comparison, the 30-share Sensex has lost 3,771.98 points or 6.47 per cent.

 

What is the opinion of experts

  • Rahul Shah, Co-Head (Research), Equitymaster, said, “Midcap and smallcap indices were higher than the Sensex during good times. So it is natural that they will fall more than the Sensex in bad times.” He further said that as far as the current phase is concerned, the markets are not expensive now, but they are not very cheap either. “This is a market where quality and growth are rewarded while high valuations and poor quality are rejected,” Shah said.
  • Emkay Investment Managers Ltd. Sachin Shah, Fund Manager, said, “There has been some panic in the capital markets, both global and domestic, in the last 6 months. Clearly this panic is due to challenges on the economic front, geopolitical tensions, high inflation environment, high interest rates and selling by foreign institutional investors.
  • “So it seems that midcaps and smallcaps have underperformed. But we also have to keep in mind that in the last two years, the performance of midcap and smallcap was much better.

 

Gave 63 percent return in 2021

The shares of small companies gave 63 percent return to the investors while performing well in 2021. In 2021, the midcap had gained 7,028.65 points or 39.17 per cent, while the smallcap had gained 11,359.65 points or 62.76 per cent. In comparison, the Sensex had gained 10,502.49 points or 21.99 per cent last year. On June 20 this year, BSE Smallcap had come down to its 52-week low of 23,261.39 points. It was at its one-year peak of 31,304.44 on January 18. Similarly, the midcap had fallen to its 52-week low of 20,814.22 points on June 20. It climbed to its one-year high of 27,246.34 on October 19 last year. The Sensex had slipped to a 52-week low of 50,921.22 points on June 17 this year. On October 19, 2021, the Sensex reached its one-year high of 62,245.43 points.

(Input- PTI, Sumedha Shankar)

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