Markets bleed: Midcap indices close to hitting two-year lows

By: | Published: February 19, 2019 1:38 AM

With BSE Sensex extending its fall to the eighth day and NSE Nifty to the seventh day on Monday, Midcap indices of both Sensex and Nifty are close to hitting their respective two-year low levels.

sensex, nifty, mid cap, nse, bseBSE Midcap and Nifty Midcap are both 92 points and 60 points away from hitting their two-year lows.

With BSE Sensex extending its fall to the eighth day and NSE Nifty to the seventh day on Monday, Midcap indices of both Sensex and Nifty are close to hitting their respective two-year low levels.
“Volatility is generally high going into elections and this compresses valuations, especially for mid and small caps and hence there is a sell off,” said Harendra Kumar, managing director at Elara Capital.

BSE Midcap and Nifty Midcap are both 92 points and 60 points away from hitting their two-year lows. In fact, the Nifty Small Cap index had hit its two-year low on October 26, 2018.
However, the index again hit its fresh two-year low on Monday, at 13,118.58 points, ending 1.01% lower. On Monday, the BSE Midcap closed the session 1.04% down at 13,795.46 points and Nifty Midcap 100 closed 0.93% lower at 16,063.35 points.

Brokerages had earlier warned of the bear trap that Indian market could witness. Earlier, Nomura had in a report said that it expects Asia including India to soon enter the third and final wave of bear market.

In the last two years, worst performers in both Nifty Small Cap and Nifty Mid Cap include Reliance Infrastructure, Reliance Power, Vakrangee, Central Bank of India and Reliance Capital. In the Nifty Midcap space, 24 stocks have fallen more than 25%, while in Nifty Small Cap 44 stocks have slipped over 25%. Other worst performers include Reliance Communications, Suzlon Energy, Manpasand Beverages, SREI Infrastructure and Infibeam Avenues.

For CY19, Jefferies prefers large-caps over mid-caps. “Valuations are not compelling yet despite their fall in 2018, with a bias towards defensives and GARP across sectors, except in Financials where earnings are set to rebound,” Jefferies had earlier said in a report.

Some of the best performers include HEG, Indiabulls Ventures, Graphite India, Jubilant Foodworks, Larsen & Toubro Infotech and NIIT Technologies. Harendra Kumar said that if the investment horizon is three years, then stocks are at very compelling levels.

“In a bull case environment they even outperform large caps, but for that one has to be patient,” added Harendra.

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