NSE MD and CEO Ashishkumar Chauhan said small investors who do not have the capacity to manage high-risk levels should not enter riskier parts of markets. This comes as markets witnessed the worst single-day fall for the smallcap index since December 2022. Smallcap index fell 5% today (March 13) while midcap index lost 3% and microcaps as well as SME stock indices dropped around 5% each.
Leverage must be used for investors who can afford the risk, Ashish Chauhan said as he stressed higher entry barriers to risky products. He said at the SEBI-NISM Research Conference, “Equity F&O size seems large, but premium volume less.”
What ICICI Securities said on smallcaps and midcaps?
ICICI Securities said in a note, “The market breadth is declining, which is a sign of mean reversion in mid/small cap stocks from overbought trajectory. Mid and small-cap indices have rallied 35 percent since October 2023. Intermediate corrections to the tune of an average of 12 percent in mid and small-caps have been a bull market norm. At present 8 percent correction is behind us.”
ICICI Prudential Mutual Fund said that it will not accept lump sum money in its mid- and small-cap schemes from March 14.
Sebi chief’s warning for smallcaps and midcaps
Sebi chief Madhabi Puri Buch said earlier that there is “froth” in small and mid-cap stocks which had “off the charts” valuations which indicates price manipulation in the segment. The valuation parameters are “off the charts” and not supported by fundamentals, she said, adding, “These appear, as regulators like to call it… ‘irrational exuberance’.”
The article originally appeared on Hindustan Times.