After a green start to the day, India’s stock market has taken a sharp downturn, with the Sensex plunging 1000 points or down 1.23% to 78,819.04 and the Nifty falling by 309.10 points or down 1.28% to 23,966.80.
But the real drama is happening in the mid-cap and small-cap stocks, where investors are seeing deep red numbers. The BSE MidCap index dropped by more than 2.5%, and the BSE SmallCap index saw an even bigger fall of 3.05%.
So, what’s behind this market slump, especially for small and mid-cap stocks? Let’s break it down.
Geopolitical tension stirring investor anxiety
One of the key reasons for the market’s sharp drop is the ongoing geopolitical tension between India and Pakistan. After the deadly terror attacks in Pahalgam, where over 26 lives were lost, India responded by taking firm diplomatic steps, including suspending the Indus Water Treaty. Pakistan has retaliated, and firing has been reported along the Line of Control.
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This spike in geopolitical risks has investors on edge, particularly ahead of the weekend. The Nifty VIX, which measures market volatility, surged by 6% today alone, showing just how nervous traders are.
Profit-taking hits small and mid-caps hard
While large cap stocks generally offer more stability, small and mid-cap stocks are known for their volatility, making them more prone to sudden price swings. After a strong rally in recent weeks, investors have begun taking profits, triggering a sharp decline in these segments.
The BSE MidCap index dropped 2.51% to 42,497.91, and the BSE SmallCap index fell by 3.05% to 47,764.74. Among the biggest losers were stocks like Biocon (down 4.63%), Laurus Labs (down 4.97%), and ACC (down 5.48%), which have seen investors pull back. On the small-cap side, Muthoot Finance dropped by 6.83%, Motilal Oswal fell by 6.89%, and Cyient plunged by 8.43%.
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It is not just the geopolitical situation that is worrying investors. There’s also growing concern about the broader economic environment. The uncertainty surrounding the global economy,
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