Smallcap & Midcap bloodbath: Why Nifty Midcap 100 fell over 11% from record highs

Small and midcap selling picks momentum

A quick look at the key indices reveal that the Nifty is down about 7% since early August, the Nifty Midcap 100 hit a record 64,451 on August 26 and closed Wednesday at 57,566, nearly 11% lower. Until late September, midcaps had fallen broadly in step with the large cap peers. That has now changed, since September 25, the Midcap 100 has lost another 5.5%, while the Nifty has slipped just 1.4%.

Why has the small and midcaps selling gained traction, and why are they falling more than their large cap peers? . Tanvi Kanchan, Associate Director, Anand Rathi Share and Stock Brokers, explained that “the valuation gap is finally narrowing, though it is still wide. To be fair to midcaps, this is not bubble territory by their own recent standards; at about 27 times, the Midcap 100 is some 9% below its five-year median of 29.7 and well below its one-year median of 31.6. Midcap earnings grew 23% in the June quarter, an 11-quarter high, but large cap earnings grew 21% in the same quarter.”