Midcap index slumps 1,200 points or 2%; Persistent Systems, Suzlon Energy, BSE top draggers

Indian equities continued to slump for the fifth straight day as the hawkish Fed continued to weigh on global markets. In Friday's session, dragged down by the IT index, headline indices fell sharply, with the BSE 30-share Sensex index down nearly 800 points at the last count. Nonetheless, midcap index underperformed the frontline indices and last was down as much as 1.8 per cent or 1,044.5 points.

Top draggers leading losses in the index are Persistent Systems, Suzlon Energy, BSE, IDFC First Bank, Coforge, Indian Hotels, Mphasis and Dixon Technologies among others.

G. Chokkalingam, Founder- Equinomics on the drastic fall in midcap counters said, "Since FIIs continue to sell & large caps are under pressure, and global markets also corrected quite significantly , it gave some fear to retail investors also. Moreover , this fall is happening when many FIIs are on holidays , therefore there is some apprehension in the market that this weakness in overall market may continue to remain weak till end of December. Therefore in my view retail investors also reluctant to put money in small and mid caps."

Meanwhile, Trivesh D, COO Tradejini said, "The mid-cap stocks look strong at the moment, with no immediate pressure on them. The index appears stable, whether you look at the Mid-cap 50 or the Mid-cap 100. These stocks have delivered impressive gains this year, with the Nifty Midcap 100 up 28 per cent, significantly outperforming the Nifty 50’s 11 per cent rise in 2024 so far."

However, it's important to recognize that some mid-cap stocks are significantly overvalued. Many of these stocks have PE ratios that are historically high, which wasn't the case previously. We agree on this overvaluation, and while there’s no visible pressure in the current index performance, we feel that a correction could potentially occur later on, added Trivesh.

On the contrary, Chokkalingam believes that by the end of December small & mid cap segment will recover significantly and it will outperform Sensex and Nifty over next 1 or 2 quarters 

Continued robust inflow of new retail investors and availability of many attractive growth and deep value stories in the small and midcap segment will lead to this outperformance eventually in the short term, added the expert.