Small caps, mid caps, even large caps lose outhttps://indianexpress.com/article/business/market/small-caps-mid-caps-even-large-caps-lose-out-5391001/

Small caps, mid caps, even large caps lose out

While the indices were scaling new peaks every day driven by a bunch of six or seven stocks, most investors have been sitting on huge losses and equity mutual fund schemes have under-performed their category averages.

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Last month, Goldman Sachs lowered its investment view from overweight to market weight. “We believe the risk/ reward for Indian equities is less favourable at current levels,” the investment banking firm wrote.

With the heavyweights coming off their peaks, the Indian stock markets are now well and truly down in the dumps.

More than 82 per cent of all stocks with a market capitalisation of Rs 1,000 crore and more have been in the red since January this year; while 72 per cent of these 725 stocks have lost more than 10 per cent, a good 60 per cent have given up more than 20 per cent of their value.

While the indices were scaling new peaks every day driven by a bunch of six or seven stocks, most investors have been sitting on huge losses and equity mutual fund schemes have under-performed their category averages.

“The re-rating of a small quality corner of the market has to be finite and cannot hold up the index indefinitely,” strategists at Bank of Merrill Lynch had cautioned in June.

Last month, Goldman Sachs lowered its investment view from overweight to market weight. “We believe the risk/ reward for Indian equities is less favourable at current levels,” the investment banking firm wrote.

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While there are those who believe the correction in stock values could be a buying opportunity the fact is that the macro-economic environment has turned adverse with the sharp depreciation in the currency and some shortage in liquidity that has driven up the cost of money. Under the circumstances, the growth in corporate earnings could be lower than anticipated. —FE