Dalal Street began the week deep in red with the Indian equity markets witnessing a full-blown meltdown on today, April 7. While the Sensex and Nifty crashed over 4% intraday, the mid and small cap saw deeper cuts . The BSE Midcap Index dropped nearly 4%, while the Smallcap Index tanked over 5%, both reflecting the big pain in broader markets beyond the headline indices.
Midcap stocks under pressure
The BSE Midcap index is down nearly 4%, currently trading at 38,945.06. Leading the losers in this segment were Mazagon Dock (down 8.8%), Bharat Forge (down 8.4%), ZEEL (down 8%), Fluorochem (down 7.6%), and Thermax (down 7.3%).
However, a few midcaps managed to stay afloat like Delhivery gained 1.45%, Hindustan Petroleum rose 0.73%, and GMR Airports added 0.41% in intraday trade.
Smallcaps take a beating
The BSE Smallcap index also nosedived over 5%, now at 43,420.37. Some of the worst-hit stocks include RGL (down 12.1%), Genesys (down 11.9%), Transpek (down 11.9%), EMBDL (down 11.7%), and JTL Industries (down 11.5%).
On the brighter side, a few smallcaps defied the trend like Cupid surged 7.49%, Sadhna Broadcast rose 4.95%, NACL Industries gained 3.88%, followed by Rustomjee and GPT Healthcare, which also posted minor gains.
Why are mid and small-cap stocks falling?
Global Trade War Panic- The US and China reignited fears of a global slowdown with a fresh exchange of tariffs. The US imposed a 26% tariff on Indian imports, prompting China to retaliate with 34% duties on American goods. This triggered a chain reaction across global markets, hitting India’s trade-sensitive stocks.
Foreign Investor Pullout- With global uncertainty rising, foreign institutional investors (FIIs) are pulling money out of emerging markets, particularly from riskier assets like mid and small-cap stocks, which are seen as more volatile.
Fear of a US Recession- Worries about an impending US recession has spooked global investors. As the world’s largest economy stares at a potenial slowdown, investor sentiment across markets have turned risk-averse, leading to widespread sell-off.
India VIX surges, signaling fear
Adding to the anxiety, the India VIX – the volatility index – shot up 57% to 21.62, reflecting rising investor nervousness. This is the highest the Volatility Index has risen since the June election results day. The Volatility Index had spiked up to 130 levels on that day and it is now trending close to those levels.
Global cues worsen the mood
Asian markets mirrored Wall Street’s carnage. Hong Kong’s Hang Seng, Japan’s Nikkei, and South Korea’s Kospi all tumbled today. The Dow Jones, Nasdaq, and S&P 500 also ended last week down by over 5% each.