Small stocks hit hard in massive March sell-off, plummet up to 30 per cent

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Published: April 10, 2020 4:24:24 PM

The coronavirus pandemic led to lockdowns across the world, triggering fears of a global recession.

Small stocks, Covid-19 crisis, BSE , coronavirus pandemic, Sensex, Covid-19 outbreak, Motilal Oswal, BSE SensexEquity benchmarks posted their biggest ever one-day falls in March, in tandem with other global markets, as investors fled risky assets amid the Covid-19 outbreak.

The small- and mid-cap indices of the BSE plunged up to 30 per cent last month, underperforming the benchmark, as markets had a harrowing time due to the Covid-19 crisis.  March turned out be a nightmare for the domestic stock markets as worries related to the impact of Covid-19 badly hit investor sentiment. The coronavirus pandemic led to lockdowns across the world, triggering fears of a global recession.

In the month of March, the BSE mid-cap index fell 4,030.09 points or 27.60 per cent, while the small-cap gauge tanked 4,100.09 points or 29.90 per cent.  The benchmark Sensex fell by 8,828.8 points or 23 per cent during the past month.

“Indian equity markets have corrected significantly over the last one month (Nifty down 23 per cent in Mar’20) in tandem with global equity markets due to headwinds from the Covid-19 outbreak,” a report by Motilal Oswal Securities Limited had said.

Selling in the market was so strong that the benchmark index came crashing to its one-year low of 25,638.9 on March 24 in just about two months after scaling its all-time peak of 42,273.87 on January 20 this year. The mid-cap index also fell to its one-year low of 9,555.24 on March 24 after hitting its 52-week high of 15,930.78 on February 12.
Likewise, the small-cap index hit its all-time low of 8,622.24 on March 24.

Equity benchmarks posted their biggest ever one-day falls in March, in tandem with other global markets, as investors fled risky assets amid the Covid-19 outbreak.  According to market analysts, mid- and small-cap stocks are more prone to selling during times of uncertainty.  So far this year, the small-cap index has declined by 3,405.62 points or 24.85 per cent, while mid-cap fell by 3,593.48 points or 24 per cent.

In 2020 so far, the 30-share BSE Sensex has dropped 10,094.12 points or 24.46 per cent.  Markets had achieved big milestones last year, with the BSE Sensex crossing the historic 40,000 mark while the broader NSE Nifty conquered the 12,000 level.

The mid-cap index tracks companies with a market value that is, on an average, one-fifth of bluechips or large firms. Small-cap firms are almost a tenth of that.

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