Midcap index drops 10% from new highs hit last week; most broken stocks

Including today’s decline, the index has fallen more than 10 percent from its new high of 33,243 it hit on October 19. This is the biggest one-week fall for the index in the last one year.

The fall in midcap stocks is a result of profit booking after seeing impressive gains in the last one year. The Nifty Midcap index has outperformed the benchmark in the past one year, rising nearly 80 per cent against the 51 per cent rise in the Nifty 50. Meanwhile, the overall market sentiment is also down since FIIs became net sellers in October, which has impacted the broader markets.

All the constituents of Nifty Midcap 100 Index have given negative returns since hitting new highs on 19 October. IndiaMart Intermesh was the biggest loser of 20 per cent in the period, while Aarti Industries, Naveen Fluorine, Dixon Tech, Coforge, Voltas, Hindustan Aeronautics, and Astral Poly Technic fell over 10 per cent each.

Meanwhile, in today’s session, Coforge was the top midcap loser, down 9 per cent, followed by IndiaMart InterMesh, down 5 per cent. L&T Tech, Mphasis, Dalmia Bharat, Dixon Tech, Nippon India and Astral Poly also lost over 3-3 per cent in today’s session.

While experts are still bullish on the broader markets and expect midcap stocks to deliver strong returns in the long term, they believe midcap stocks may remain volatile in the short term.

Analysts recommend quality stocks in case of any further downside as midcap stocks are likely to outperform large cap stocks in the long run. He said that investors can focus on new startups, fin tech, EV, green energy, companies where demand is likely to increase in future.

Going forward, the stock’s performance will be primarily based on Q2 earnings results and a correction may be seen in overvalued stocks whose fundamentals may not justify its valuation. Hence, it is very important for investors to choose the right stock with strong fundamentals.