The benchmark indices are taking a breather but the broader markets are bleeding today. In fact the sell-off in this space is continuing for the third straight session today, with smallcap and midcap stocks bearing the brunt. The BSE SmallCap index tumbled over 1,049 points, or nearly 2%, to 51,984.13, while the BSE MidCap index also slipped 1.75%, shedding 799.59 points intraday.
In contrast, frontline indices like the Sensex and Nifty held relatively steady, down only marginally. By 1 PM, the Sensex was down 43 points at 81,401.51, and the Nifty was trading at 24,793.25, down 18.80 points.
So what is driving this selloff in the broader market? Here are the three main reasons weighing on investor sentiment:
Three reasons why small and midcaps are falling today
The key reasons why we are seeing a sell-off across broader markets
Rising geopolitical tensions in West Asia
The conflict between Israel and Iran stretches into its seventh day, stoking fears across global markets. With Iran’s Supreme Leader rejecting US President Donald Trump’s demands for unconditional talks and retaliatory military actions reportedly intensifying, investors are bracing for a prolonged standoff.
The key concern is a full-blown conflict in the region could disrupt key global energy routes, especially the Strait of Hormuz, which handles nearly 20% of seaborne oil trade and 25% of LNG exports.
Crude oil spikes amid supply risks
Crude oil prices have surged on the back of rising West Asian tensions and a sharp drawdown in US inventories. In just six days, WTI crude jumped from $65 to $75, and has now gained 10% in the past week, and 20% over the last month.
Higher oil prices raise concerns about import bills, inflation, and interest rate pressures, particularly for emerging economies like India.
Weakening rupee and global cues
The Indian rupee slipped to a three-month low against the US dollar, falling 0.5% to 86.88. A weaker rupee adds pressure to companies reliant on imports and also hints at capital outflows, which can hurt domestic liquidity.
Meanwhile, in global markets, Dow Jones futures were down 224 points or 0.53%, indicating a cautious sentiment.
Key smallcap losers
Several smallcap stocks saw deep cuts in the intra-day trading session. Prime Focus was the worst hit, down 8.62%, followed by Electronics Mart India (EMIL) with a 7.45% drop. Minda Corporation fell 6.17%, while MobiKwik shed 5.98%. SastaSundar Ventures and 63 Moons Technologies also declined 5.92% and 5.91%, respectively.