Small-cap indices witness sharp correction from the highs of Oct’21

New Delhi: Small-cap indices have corrected sharply from the highs of October 2021.

While the Nifty-50 declined 15 percent from its October 2021 peak against a 20 percent decline in midcaps and 28 percent decline in smallcaps, the broader market has witnessed a much sharper sell-off.

NSE Smallcap 100 index is down even vs December 2017 levels as per a report by Motilal Oswal Financial Services.

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India has outperformed key global markets in June’22 amid various challenges. Autos gained while Metals and Private Banks were top losers and 85 percent of BSE 200 constituents declined in June’22.

Average daily cash volumes dropped 45 percent from the Oct’21 peak. Mid-cap volumes are down 2/3rd vs Oct’21 peak while Smallcap volumes have halved vs Oct’21, the report said.

The corporate profit-to-GDP ratio rebounded to a 10-year high of 4.3 percent in 2022. The ratio improved for 18 of 25 sectors.

The US CPI surpassed India CPI for the first time in a decade in Sep’21 and has remained so since then.

FIIs recorded outflows for the ninth consecutive month and stood at $6.3 b in Jun’22 – the highest since March’20. Domestic inflows remained robust at $6 b in Jun’22 and the year to date 2022 inflows stood at $26.7 b.

Forex reserves are at the lowest since May’21 and the Indian rupee at an all-time low v/s US dollar. Forex reserves declined to $591b, a decline of $51b from its peak of Oct’21. Reserves are at their lowest level since May’21.

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