Small and mid-cap stocks lost more than Rs 4.26 lakh crore market capitalisation on Tuesday as markets declined.
Broader indices fell as much as 4% during the day, the most in a day in over eight months since Dec. 23, 2022.
Stocks included in the BSE SmallCap index recorded a cumulative fall in market cap by Rs 2.48 lakh crore, according to Cogencis data, while those in the BSE MidCap index fell by a total of Rs 1.79 lakh crore.
NSE indices saw an erosion of Rs 1.34 lakh crore in the Smallcap 250 index, while those in the Midcap 150 index fell by Rs 1.76 lakh crore.
Caution has set in after several brokerages raised concerns over the sustainability of the rally in small-cap stocks. Kotak Institutional Securities dropped mid- and small-cap stock recommendations, citing "irrational exuberance" among investors.
The bullish trend began at the start of the financial year, with the NSE Nifty 50 rising as much as 15.7% over the period, while the Smallcap 250 and the Midcap 150 rose 36.6% and 32.5%, respectively.
Rail Vikas Nigam Ltd. was the top loser for the day among the stocks included in the broader indices, falling 15% against Monday's closing price. The stock fell the most in a day in over 42 months since March 23, 2020.
Mahindra Holidays & Resorts India Ltd. and Cochin Shipyard Ltd. fell over 14.5% and 14.2%, respectively. Other stocks that were laggards included BEML Ltd., which dropped 12.1%; Mazagon Dock Shipbuilders Ltd., which declined 11.8%; and Indiabulls Real Estate Ltd., which fell 11.6%, among others.
Of the top five losers of the day, four were public sector undertakings, which also benefited the most from the uptrend seen since the beginning of the year.
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