So far this year, the correction in mid and smallcap stocks has been far steeper than in large caps. The Nifty Midcap 100 has fallen 11.29%, while the Nifty Smallcap 100 has slumped 14.6%, significantly underperforming the benchmark Nifty 50, which is down just 2.91% year-to-date.
The broader market downturn has pushed nearly 30% of mid and smallcap stocks close to their 52-week lows, with some plunging as much as 60% from their peaks.Moreover, nearly 70% of these stocks have declined at least 30% from their recent highs, highlighting the severity of the ongoing correction.
Steepest Midcap Declines: Off 52-Week Highs
Some midcap stocks have witnessed sharp corrections, falling nearly 50-60% from their peaks. Mangalore Refinery and Petrochemicals Ltd (MRPL) has declined 60% from its 52-week high of ₹289.25, which it hit on February 19, 2024. Cochin Shipyard has fallen 55% from its peak of ₹2,977.10 ( July 8, 2024), while Vodafone Idea has slumped 54% from its high of ₹19.15 (June 28, 2024).
Biggest Smallcap Losers: Off 52-Week Highs
Smallcap stocks have suffered even more, with Sterling & Wilson dropping 64% from its 52-week high of ₹828 (May 21, 2024). Chennai Petroleum is down 61% from its peak of ₹1,274 (July 16, 2024), while Raymond has slumped 59% from its high of ₹3,493 (July 8, 2024).
Despite the sharp selloff, midcap and smallcap indices remain expensive relative to their historical valuation metrics. The Nifty Midcap 100 is trading at 30 times its one-year forward earnings, while the Nifty Smallcap 100 is valued at 23 times.
Also read: As FPI sell-off nears $10 billion, mid and small-cap stocks bleed
Market analysts point out that while foreign institutional investors (FIIs) have been actively selling large-cap stocks, bringing their valuations to more reasonable levels, mid and smallcap stocks still appear overpriced.
