Mid & Smallcap Indices Entered Bear Phase by declining over 9% in month

The Nifty Midcap 100 and Nifty Smallcap 100 indices have declined up to 9% this month. This drop is due to valuations, macroeconomic pressures, and profit-booking by investors.

The small and midcap indices fell sharply by 5% in two sessions. High valuations and consistent foreign institutional investor (FII) selling have contributed to this decline.

Subdued quarterly earnings have also played a role in this downturn.

Rising global uncertainty and geopolitical tensions have added to the selling pressure. The potential for a global demand slowdown has further impacted these indices. Besides, the Reserve Bank of India’s (RBI) strict stance on inflation and rising bond yields have made debt investments more attractive than equities.

Analysts see this correction as necessary to align valuations