Nifty Smallcap index drops over 2% to 2-week low; NBCC, IRB lead the sell-off today

The Nifty Smallcap 100 was trading 2.37% lower with index constituents falling up to 10%. The top laggards on the index were Amber Enterprises India down over 10%, NBCC (India) falling more than 8% and, IRB, Central Bank of India and SJVN share prices falling over 7% each.

Fall in Amber Enterprises shares came after the company’s net loss in Q2FY24 widened to ₹5.6 crore from a loss of ₹2.2 crore a year ago.

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Shares of Hindustan Copper, Tata Teleservices (Maharashtra) Ltd, Indian Overseas Bank, Shree Renuka Sugars and Deepak Fertilizers declined over 6% each, while Zensar Technologies, Praj Industries, UCO Bank, Piramal Pharma, HFCL, Tejas Networks and IIFL Finance were plunged over 5% each.

Only six stocks in the Nifty Smallcap 100 index were trading in the green. These included CreditAccess Grameen (up 10%), BSE (up 8.5%), Medplus Health Services and Gujarat Narmada Valley Fertilizers and Chemicals Ltd gaining 1-2% while Suzlon and CDSL trading marginally higher.

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The Nifty Smallcap 100 has seen a decent rally this year with the index surging over 35% in the past six months and more than 30% year-to-date (YTD).

Analysts said the escalation of geopolitical tensions in the Middle East, elevating US Treasury yields and a mixed bag earnings season have led to profit booking in the smallcap stocks.

Moreover, outflows of foreign capital from domestic equities also led to the recent sharp downfall in the stock market. The Foreign Portfolio Investors (FPIs) remained net sellers in the third week of October as the US Federal Reserve officials emphasised the imperative for continued monetary tightening policy and hold interest rate high.

Also Read: These 48 smallcap stocks rise 10-30% even as Sensex sheds 1% on volatile week; do you own?

FPIs sold ₹12,146 crore worth of Indian equities and offloaded a total of ₹6,555 crore as of October 20, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.

“Investors are likely to remain cautious in the near term due to concerns about the long implication of geopolitical tensions in the Middle East. We expect volatility to persist, although long-term investors will find bargain hunting opportunities due to an optimistic Q2 FY24 earnings estimate and a festival-driven demand environment,” said Vinod Nair, Head of Research at Geojit Financial Services.

At 2:25 pm, the benchmark Sensex was trading 349.33 points, or 0.53%, lower at 65,048.29, while Nifty 50 was down 122.25 points, or 0.63%, at 19,420.40. Among broader markets, Nifty Smallcap 100 traded 2.24% lower at 12,637.85, and the Nifty Midcap 100 index fell 1.82% at 39,153.55.

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Updated: 23 Oct 2023, 02:35 PM IST