Nifty Midcap and Smallcap indices tumble over 2% amid profit booking

Indian stocks faced significant losses in today's trading session, with all sectors showing declines as of the current time. Although the Nifty 50 and S&P BSE Sensex initially opened higher, tracking a strong performance in global markets, they couldn't sustain the upward momentum. As the day progressed, both indices experienced a decline of nearly 0.80% each by the mid-trading session.

The pain was particularly felt in mid-and small-cap stocks, largely due to profit booking. Both the Nifty Midcap 100 and Nifty Smallcap 100 indices recorded intraday declines of 2.1% and 2.3%, respectively.

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In the Nifty Midcap 100 index, Vodafone Idea saw the most significant decline, plummeting by 14%, followed by Zee Entertainment, Paytm, Patanjali Foods, and YES Bank, all experiencing declines of over 4%.

Among small-cap stocks, HFCL led the losses with a drop of 5.6%, followed by NLC India, Welspun Living, IIFL Finance, JK Lakshmi Cement, and Piramal Pharma, all trading down by over 4%.

On the other hand, India's market regulator has reportedly directed the country's asset managers to provide investors with more information regarding the risks linked to their small and mid-cap funds, as disclosed by a fund manager and two individuals familiar with the situation to the news agency Reuters.

Also Read: SEBI directs asset managers to disclose more risks about small, mid-cap funds

Additionally, PSU banking stocks are also witnessing notable selling pressure, with the Nifty PSU Bank index trading with a 2% decrease as all 10 constituents of the index are trading in the red. Furthermore, Nifty Media and Nifty Realty are among the worst-performing sectoral indices, facing losses of 3% and 2.48%, respectively, as of 02:30 p.m.

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The markets are currently seeking direction, with significant anticipation surrounding the upcoming release of key economic indicators. Investors are closely eyeing the US GDP numbers, scheduled for today, along with the release of personal consumption data (inflation) expected tomorrow. Additionally, India is set to unveil its Q3 FY24 GDP print tomorrow, adding to the market's focus on economic data.

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"The market is likely to be in a range-bound zone in the near term. FIIs have sharply reduced their selling this month and have turned buyers to the tune of ₹872 crores in the cash market, so far in February, despite the high US bond yields. This indicates that FIIs are unlikely to press big selling pulling the market sharply down," said Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

"Because of this favourable market construct, dips are getting bought, aided by sustained flows into the market. The present range-bound consolidation phase is likely to continue for some time in the absence of strong positive or negative triggers."

“The market resilience will be supported by strong stocks like RIL, Bharti, and auto stocks, particularly Tata Motors, M&M, and Bajaj Auto, which have emerged as strong leaders in this phase of the market,” he further added.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.