Aditya Shah, a financial planner, has sounded caution as investors lost over Rs 12 lakh crore amid weak market sentiments. “People are already talking about No capital gains tax. Correction to abhi start bhi nahi hua hai!,” he wrote in a post on X (formally Twitter).
The benchmark indices, Sensex and Nifty, continued to fall for the fourth straight day on January 13, with smallcap and midcap stocks witnessing a bloodbath. Data shows that over Rs 12.39 lakh crore of market cap has been eroded during today’s session. The broader markets came under fire the most as the mid and small-cap indices underperformed the frontline indices.
“If you chase small and mid-caps at irrational valuations citing order book and growth opportunities. Correction will happen!” he added.
On Monday, the BSE Sensex was trading at 76,444.80, down 934.11 points or 1.21 percent. Nifty at 23,104, down 327.50 points or 1.4 percent. Midcap and Smallcap indices plunged 4 percent each. The overall market capitalisation of BSE-listed firms dropped to nearly Rs 417 lakh crore from Rs 430 lakh crore in the previous session.
Data showed the BSE Smallcap index and the BSE Midcap index are now down 13-14 percent from their one-year high levels. Sensex is down 11 percent from its 52-week high.
A slowing domestic economy, weak earnings, record low rupee, looming China-US tariff war and foreign outflows are among many reasons why the stock market is falling for the last couple of days.
Analysts believe largecap indices Sensex and Nifty may stay weak in the short-term. They do not rule out sharper cuts in many ‘narrative’ stocks from midcap smallcap pockets.
In the current month, foreign portfolio investors (FPIs) have sold off Indian equities worth over Rs 21,350 crore till January 10, after a Rs 16,982 crore selloff in December. They have been in sell mode since October last year. In October, they sold Indian stock worth Rs 1,14,445 crore, and in November, they took away Rs 45,974 crore from the Indian stock market.