The Nifty Small-Cap 100 index has fallen more than 5% in the last three trading sessions, which is driven by market sentiments amid the news and the dovish MPC policy of the RBI. witnessed significant sell-off from the last 3 trading sessions, erasing much of the gains they had accumulated in recent weeks. The Nifty Small-cap 100 index plunged more than 3% to its day low, while the Nifty Mid-cap 100 index fell by more than 1.5% in a day. This sharp decline comes amidst the RBI’s dovish commentary on monetary policy and the decision of unchanged interest rates and this is one of the reasons that can be seen as a good opportunity to book profits in overheated stocks.
The sell-off has left investors concerned about the future trajectory of the broader market, particularly for smaller companies. Analysts are weighing in on the potential causes and implications of this development, and we will delve deeper into these perspectives in the following sections.
Nifty Small-cap 100
The Nifty Small-Cap 100 index has fallen more than 5% in the last three trading sessions, which is driven by market sentiments amid the news and the dovish MPC policy of the RBI. The index has generated around 70% returns in a year where, in between, the index has corrected a few times this year and given breakouts again to trade higher and make new all-time highs.
In September 2023, the index was under consolidation until November 2023, when it saw a maximum fall of 8.34%. Another single-day fall was at the end of the year 2023, at 6.38%, and the most recent one in mid-January 2024 was at 4.81%.
The falls were overcome by good rallies later on, so there is no need to panic for the investors. Mostly, the current fall will recover from the level of 15,700, which is a support for the index.
Nifty Mid-cap 100
The previous three trading sessions have seen a more than 3% decline in the Nifty Mid-cap 100 index, mostly due to market sentiment after the news and the RBI’s dovish MPC policy. In between the index’s modest corrections this year and subsequent breakouts to trade higher and reach new all-time highs, the index has produced gains of almost 57%.
The index began to consolidate in September 2023 and continued until November 2023, when it suffered its worst decline of 9.44%. There was also a single-day decline of 5.84% at the end of 2023 and a recent one of 5.24% in mid-January 2024.
General Market Condition
Indian shares experienced a subdued performance as investors grappled with the Reserve Bank of India’s decision to maintain key interest rates, dampening hopes for immediate rate cuts in both India and the United States. The benchmark Nifty 50 and BSE S&P Sensex struggled to find clear direction, edging up a mere 0.1% each in a volatile trading session.
Blue-chip stocks opened marginally lower and largely remained flat, with the Nifty 50 witnessing its busiest trading day since mid-December following the RBI’s announcement to hold rates unchanged. Despite early-week optimism, both benchmarks are down so far for the week.
Meanwhile, the Nifty small-cap and mid-cap indices faced steeper declines, and snapping their recent outperformance over the blue-chip index. The Nifty volatility index remained elevated, near the 10-month high reached two weeks ago ahead of India’s budget announcement.
In sectoral performance, financials managed a modest rebound from Thursday’s losses on Friday but dipped on Monday again, with the Nifty financials down, while the Nifty bank and private banks showed losses. However, concerns over demand from China weighed on the metals sector, leading to a decline in the CNXMETAL index.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.
