BSE Smallcap index set to record its sharpest fall for Feb in 6 years

The S&P BSE Smallcap index is set to record its sharpest decline in six years during the month of February as a sharp sell-off engulfed equities amid Russia-Ukraine conflict.

At 02:37 pm, the BSE Smallcap index was up 0.32 per cent at 26,534.03 points. It, however, has fallen 9.2 per cent in the month of February, recording its sharpest fall in the month since 2016. Back then, it had fallen 12.2 per cent during the month. In the month of March 2020, the S&P BSE Smallcap index had tanked 30 per cent, while in October 2008, the index had plunged 32 per cent in a single month.

The Russia-Ukraine crisis led to a sharp jump in crude oil and other commodity prices, which is a major headwind for equity markets as the world is already struggling with multi-year high inflation.

Out of 891 stocks from the BSE Smallcap index, more than half, or 495 stocks, have fallen over 10 per cent so far this month. Easy Trip Planners’ market price has almost halved to Rs 277.50 from Rs 554.90 on January 31, 2021. Syncom Formulations, GE Power India, Brightcom Group, Mahindra Logistics, Himatsingka Seide, Indiabulls Housing Finance, JBM Auto and Indo Count Industries, meanwhile, have seen their market value decline in the range of 29 to 38 per cent during the month.

However, 95 stocks have bucked the trend by recording positive returns. Vadilal Industries, Orient Bell, Shankara Building Products, Eveready Industries, Ambika Cotton, Sandhur Manganese, TCPL Packaging and Excel Industries have rallied between 26 per cent and 59 per cent during the month.

“We are in a structural bull market like 2003-2007 and there were 3 corrections of more than 30 per cent in the last bull run. We are seeing the first meaningful correction in the market and long-term investors should not panic by this correction because it is just taking out weak hands before resuming its upmove. This correction will provide a good buying opportunity where major wealth can be created in the next 3-5 years,” Santosh Meena, Head of Research, Swastika Investmart had said after the S&P BSE Sensex slipped 5 per cent on February 24, 2022. The S&P BSE Smallcap and S&P BSE Midcap index had slipped 6 per cent.

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