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Business News/ Markets / Stock Markets/  Smallcap index down over 3% in February so far; time for bottom fishing?
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Smallcap index down over 3% in February so far; time for bottom fishing?

BSE Smallcap index is down over 3 per cent in February so far, while Sensex is down 0.3 per cent.

Some of the stocks, such as Ramky Infra, IFGL Refractories, WPIL, Dhunseri Ventures and PTC India Financial Services have fallen between 25-35 per cent this month. (AP Photo/Gautam Singh) (AP)Premium
Some of the stocks, such as Ramky Infra, IFGL Refractories, WPIL, Dhunseri Ventures and PTC India Financial Services have fallen between 25-35 per cent this month. (AP Photo/Gautam Singh) (AP)

After three consecutive months of gains, the BSE Smallcap index is witnessing a strong sell-off in February. The BSE Smallcap index is down over 3 per cent in February so far while the benchmark Sensex is down about 0.3 per cent. The BSE Midcap index is flat this month.

Some of the stocks, such as Ramky Infra, IFGL Refractories, WPIL, Dhunseri Ventures and PTC India Financial Services have fallen between 25-35 per cent this month.

Some 16 components of the BSE Smallcap index have fallen over 20 per cent while as many as 195 components have declined over 10 per cent in the smallcap index.

Also Read: FPI flows may remain volatile in the near term, feel analysts

Some top losers stocks in the BSE Smallcap index
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Some top losers stocks in the BSE Smallcap index

Time for bottom fishing?

Experts believe the smallcap index may see some more downward pressure and investors should shift focus to quality mid and large caps.

Abhishek Jain, Head of Research at Arihant Capital is of the view that one could consider a strategic shift towards larger cap investments, particularly in light of current market dynamics.

"In our assessment, large-cap and sizable mid-cap stocks present compelling prospects post-correction. It's prudent to redirect attention towards these segments for potential value and growth," said Jain.

Also Read: How to start investing in the stock market — A step by step guide

The smallcap index had seen sharp gains in the recent past and a correction was expected. Some experts point out that the trends of the last few years show that the smallcap index sees a rebound in March after a sell-off in February.

"Smallcap stocks had run up quite steeply recently and a correction was warranted. If we look at recent trends, we can see that except for one year, all through the last five years, we have seen February in the red, so there are historical headwinds too," said Anand James, Chief Market Strategist at Geojit Financial Services.

"But we are yet to see patterns that point to a collapse, but a time correction is a possibility. If we back history to repeat, then February’s dips would be good to go on an accumulation drive as March ended in green in all the years in the last five years, except for 2020," said James.

Rupak De, Senior Technical Analyst at LKP Securities observed that on the weekly timeframe, a spinning top pattern has emerged, indicating a potential bearish reversal in the short term.

"A bearish sentiment may persist in the short term. Consequently, engaging in bottom fishing at this level is not advisable. Caution is warranted, and close monitoring is essential. A decisive drop below 15,500 could potentially lead to additional weakness in the market," said De.

Read all market-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 13 Feb 2024, 05:25 PM IST
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