Small stocks take big hit, tank up to 15.42 per cent so far in FY20

Smallcap and midcap indices of the BSE have tumbled up to 15.42 per cent so far this fiscal, taking bigger hit when compared to their blue-chip peers.

An analysis of the performance of the three indices shows that the S&P BSE smallcap index has dropped 2,317.4 points or 15.42 per cent so far this fiscal and midcap index has tanked 1,985 points or 12.82 per cent.

However, fall in BSE’s frontline gauge Sensex was not as sharp when compared with the smaller stocks. The 30-share flagship index is down 1,527.46 points or 3.94 per cent during the period under review.

The midcap index touched its 52-week low of 12,914.63 on August 23 this year and the smallcap hit its one year low of 11,950.86 on the same day.

According to analysts, higher taxes on super rich and foreign portfolio investors, coupled with slowdown in auto sector, dented investor sentiments in the domestic equity market.

Globally, concerns over of slow growth, US-China trade war and impending recession fears also led to weak sentiment, they added.

During times of uncertainty in markets, small stocks are more prone to heavy selling pressure.

According to analysts, smaller stocks are generally bought by domestic investors, whereas overseas investors mainly focus on frontline companies.

The midcap index tracks companies with a market value that is on an average one-fifth of large firms, while smallcap firms are almost a tenth of that.