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Small Cap Stocks Have Fallen by Almost 13% This Year As Large Caps Hit Record Highs


According to the data from S&P BSE Smallcap Index has fallen as much as 12.89 percent as of Thursday from the beginning of the year 2018. Meanwhile, BSE's MidCap Index has fallen by 10.04 percent for the year so far.

Small Cap Stocks Have Fallen by Almost 13% This Year

As the Bombay Stock Exchange's (BSE) major index-Sensex hit its new high this month, the small and mid caps failed to impress investors. An analysis of the indices showed that small cap stock index was hurt the most with a loss of over 2,500 points. It was at 19,279.96 on 1 January 2018.

On the other hand, the 30-share blue-chip Sensex has gained 3,795.17 points or 11.14 percent. It scaled its lifetime peak of 38,076.23 on August 9 this year.

The small-cap index had hit an all-time high of 20,183.45 points on January 15 and the midcap index touched its record high of 18,321.37 on January 9. The major reason for a contrasting behaviour is that smaller stocks are generally bought by domestic investors, while overseas investors prefer the blue-chips.

Last year, the BSE smallcap index had gained 59.64 percent and while the midcap index zoomed 48.13 percent, and Sensex surged only 27.91 percent. The rally in the value of small caps started in February this year.

After the Union Budget announcement and reintroduction of LCTG on equities on 1 February, the BSE Sensex that had surged 6.36 percent in January, lost 4.79 percent in February and in March it fell 3.16 percent. However, in April the index gained 5.72 percent and in May it rose 0.41 percent.

It continued its upward journey in June with a 0.55 percent gain and in July it surged 6.64 percent.

Experts say that small stocks are more likely to suffer during times of uncertainty. While the MidCap index tracks companies with a market value that is on an average one-fifth of blue-chips or large firms, the SmallCap firms are almost a tenth of that.

Read more about: small cap sensex
Story first published: Thursday, August 16, 2018, 12:29 [IST]
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