NEW DELHI: BSE smallcap and mid-cap indexes have underperformed the benchmark so far this year, falling as much as 4%, with experts suggesting an aggressive US Fed and soaring inflation could lead to more market volatility in the near future.
The domestic stock market has faced many turbulence recently, such as the emergence of geopolitical tensions, inflation concerns and the sale of FII, analysts said.
“Markets need only one reason to fall as they are trading at all-time highs. And this year has been full of negative surprises like the Ukraine war, record FII sales, the economy. global economy lost momentum, inflation reversed,” said Parth Nyati, founder, Tradingo.
He explains that the small- and mid-cap indexes include stocks with characteristics such as high growth, high returns, and high volatility.
“In other words, both losses and gains are compounded relative to the large index. Therefore, during bear markets, the small- and mid-cap indexes both underperform the larger index.” Nyati added.
The BSE small-cap index has lost 1,095.98 points, or 3.72%, so far this year, while the mid-cap index has lost 666.1 points or 2.66%.
Meanwhile, sensex is down 1,277.83 points or 2.19% through May 2 of this year. The stock market was closed on Tuesday (May 3) for Eid.
However, there is no underperformance in the broader market, Nyati said. “This underlines the power of our domestic currents.”
Experts note that the US Federal Reserve’s interest rate hike and inflation are the main factors that could cause short-term volatility, while the Russia-Ukraine issue remains unresolved.
In addition, income will be a key factor for the overall market trend, they said, adding that monsoons will also remain an important factor for the domestic economy going forward.
“The Indian stock market is consolidating after a good performance last year and it is the resilience of the Indian stock market that we are seeing a well-timed wise correction despite a lot of turbulence like incessant sell-off of FII, geopolitical tension, inflation, possibility of hiking positive rate etc.
“We are outperforming most of our global peers as the outlook for the Indian economy looks promising amid near-term challenges. especially commodity-related equities,” he said. Sunil Nyati, Managing Director at Swastika Investmart Ltd., said.
According to market analysts, small stocks are often bought by domestic investors, while foreign investors focus on blue-chip stocks or large companies.
Experts said that in the past 7 months, the market has faced a lot of challenges such as the historic sell-off by foreign institutional investors (FII), inflation, geopolitical tensions, worries Concerns about central banks’ aggressive interest rate hikes, growth concerns, etc.
“All of this has caused volatility in our markets but thanks to domestic cash flow and better economic outlook, we have coped very well with most of the markets,” said Nyati of Swastika Investmart. storm surge”.
The BSE midcap The index hit a 52-week high of 27,246.34 on October 19 last year, after falling to a one-year low of 20,184.21 on May 4, 2021.
The small-cap index fell to a 52-week low of 21,846.86 on May 4 last year and hit an all-time high of 31,304.44 on January 18, 2022.
30 shares BSE sensex hit a record high of 62,245.43 on October 19, 2021. It hit a 52-week low of 48,149.45 on May 4 of last year.
On the way forward for the small-cap, mid-cap and frontline index sensex, Sunil Nyati said the market is unlikely to move significantly higher amid many headwinds, in which inflation is a challenge. biggest.
However, most of the pain has been digested without much relief on the market, so it could work well if things improve from here on.
“If FII returns to the market then we can expect better performance of the Nifty and sensex headline indices in the short term. However, in the longer term, midcap and smallcap tend to perform well. because the Indian stock market is a long-term bull market,” he noted.
Small-caps had a stellar performance in 2021, delivering a 63% return.
In 2021, the mid-cap index increased 7,028.65 points, or 39.17%, while the small-cap index increased 11,359.65 points, or 62.76%. Meanwhile, Sensex increased by 10,502.49 points, or 21.99%, last year.
The domestic stock market has faced many turbulence recently, such as the emergence of geopolitical tensions, inflation concerns and the sale of FII, analysts said.
“Markets need only one reason to fall as they are trading at all-time highs. And this year has been full of negative surprises like the Ukraine war, record FII sales, the economy. global economy lost momentum, inflation reversed,” said Parth Nyati, founder, Tradingo.
He explains that the small- and mid-cap indexes include stocks with characteristics such as high growth, high returns, and high volatility.
“In other words, both losses and gains are compounded relative to the large index. Therefore, during bear markets, the small- and mid-cap indexes both underperform the larger index.” Nyati added.
The BSE small-cap index has lost 1,095.98 points, or 3.72%, so far this year, while the mid-cap index has lost 666.1 points or 2.66%.
Meanwhile, sensex is down 1,277.83 points or 2.19% through May 2 of this year. The stock market was closed on Tuesday (May 3) for Eid.
However, there is no underperformance in the broader market, Nyati said. “This underlines the power of our domestic currents.”
Experts note that the US Federal Reserve’s interest rate hike and inflation are the main factors that could cause short-term volatility, while the Russia-Ukraine issue remains unresolved.
In addition, income will be a key factor for the overall market trend, they said, adding that monsoons will also remain an important factor for the domestic economy going forward.
“The Indian stock market is consolidating after a good performance last year and it is the resilience of the Indian stock market that we are seeing a well-timed wise correction despite a lot of turbulence like incessant sell-off of FII, geopolitical tension, inflation, possibility of hiking positive rate etc.
“We are outperforming most of our global peers as the outlook for the Indian economy looks promising amid near-term challenges. especially commodity-related equities,” he said. Sunil Nyati, Managing Director at Swastika Investmart Ltd., said.
According to market analysts, small stocks are often bought by domestic investors, while foreign investors focus on blue-chip stocks or large companies.
Experts said that in the past 7 months, the market has faced a lot of challenges such as the historic sell-off by foreign institutional investors (FII), inflation, geopolitical tensions, worries Concerns about central banks’ aggressive interest rate hikes, growth concerns, etc.
“All of this has caused volatility in our markets but thanks to domestic cash flow and better economic outlook, we have coped very well with most of the markets,” said Nyati of Swastika Investmart. storm surge”.
The BSE midcap The index hit a 52-week high of 27,246.34 on October 19 last year, after falling to a one-year low of 20,184.21 on May 4, 2021.
The small-cap index fell to a 52-week low of 21,846.86 on May 4 last year and hit an all-time high of 31,304.44 on January 18, 2022.
30 shares BSE sensex hit a record high of 62,245.43 on October 19, 2021. It hit a 52-week low of 48,149.45 on May 4 of last year.
On the way forward for the small-cap, mid-cap and frontline index sensex, Sunil Nyati said the market is unlikely to move significantly higher amid many headwinds, in which inflation is a challenge. biggest.
However, most of the pain has been digested without much relief on the market, so it could work well if things improve from here on.
“If FII returns to the market then we can expect better performance of the Nifty and sensex headline indices in the short term. However, in the longer term, midcap and smallcap tend to perform well. because the Indian stock market is a long-term bull market,” he noted.
Small-caps had a stellar performance in 2021, delivering a 63% return.
In 2021, the mid-cap index increased 7,028.65 points, or 39.17%, while the small-cap index increased 11,359.65 points, or 62.76%. Meanwhile, Sensex increased by 10,502.49 points, or 21.99%, last year.
