Weakness in Mid- and Small-caps Intensifies
Mumbai: The selloff in midcap and small-cap stocks has intensified of late as brokers are asking clients to liquidate their leveraged bets in the space in the wake of the Securities and Exchange Board of India’s warning of froth in these shares.
The recent
crackdown on Dubai-based
hawala operator Hari Shankar Tibrewala by the Enforcement Directorate (ED) for
stock manipulation has also
triggered panic among market operators, who are said to
be cutting their positions of
late, said brokers.
As many as 70 stocks with
more than Rs 1,000 crore in
market capitalisation have
declined between 15% and
50% in the last five trading
sessions while another 250
stocks have dropped 10-15%
during this period.
BSE Midcap index fell 2% in
the five trading sessions, BSE
Smalleap index declined nearly 5.9% and the Microcap
250 index dropped 7%. The Sensex wasup0.3%.
Analysts said the capital markets regulator’s heightened
scrutiny of smaller shares
amid concerns that they are
overheated after the run-up in
the past year has been a trigger
for the sell-off in them.
On small cap and midcap
stocks, Sebi chairperson,
Madhabi Puri Buch told reporters on Monday, “Some people callita bubble, some may call it froth,” Buch told reporters in Mumbai.
“It may not
he appropriate to allow that
froth to keep building.”
Brokers said the comments
have prompted them to ask
clients to cut their stock positions built on loans, especial1y ahead of the financial year
endon March 31, Investors too
are reshuffling their portfolios as part of adjustments for
tax purposes.
0 Comments