TV Prices Set to Rise Amid Rupee Depreciation and Rising Input Costs
Small & Midcap Indices Fall Up to 9% in 2025


Last Updated: 22nd January 2025 - 05:54 pm
The Nifty Midcap 100 and Nifty Smallcap 100 indices extended their losing streak on Wednesday, with both witnessing a decline of up to 2.5% during the session. This follows a broader market downturn, with both indices having already shed over 2% on January 21, signaling sustained selling pressure throughout the month.
Sensex and Nifty Decline Sharply
On Tuesday, the benchmark BSE Sensex plunged 1,235 points, closing at its lowest level in more than seven months. During intraday trading, it dropped as much as 1,431.57 points (1.85%) to touch 75,641.87. Similarly, the NSE Nifty slipped 320.10 points (1.37%) to close at 23,024.65, levels last seen on June 6, 2024. Since its peak in September 2024, the Nifty has lost nearly 12%.
Broader Market Selloff
The broader markets have suffered significant losses, with the Nifty Smallcap 100 index experiencing the steepest fall, down 9.2% so far in January 2025. Analysts attribute the decline to high valuations, persistent selling by foreign institutional investors (FIIs), and profit-booking.
Over the past two trading sessions (January 21-22), the index dropped by 5%. Major laggards included Aditya Birla Real Estate, Indiamart Intermesh, and Kaynes Technology, each losing up to 9% on Wednesday.
Meanwhile, the Nifty Midcap 100 index has fallen 7.7% this month, with Persistent Systems, Prestige Estates, and Oberoi Realty emerging as the biggest losers in the midcap segment, registering declines of up to 8%.
Factors Driving the Market Correction
The sharp 5% drop in small and midcap indices over two sessions is largely attributed to concerns over valuations, macroeconomic challenges, and profit-booking by investors.
Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, highlighted that rising global uncertainties have intensified the selling pressure. Factors such as elevated crude oil prices, geopolitical risks, and a potential slowdown in global demand have made investors cautious.
"Domestically, the RBI’s hawkish stance, emphasizing inflation risks, has added to market unease. The increase in bond yields and tightening liquidity conditions have also made debt investments more attractive compared to equities," she explained.
Following a robust rally in 2023, many small and midcap stocks reached valuations exceeding historical norms. "This naturally led to expectations of a correction, particularly in the absence of fresh catalysts to support such high levels," Srivastava noted. She also pointed out that profit-booking by retail and institutional investors, who had benefited from last year's rally, has intensified the decline. This is evident in the broader market’s underperformance, whereas large-cap indices have shown relative stability.
Market Outlook
With the Nifty and Sensex hitting multi-month lows and broader indices struggling, analysts advise investors to proceed with caution. Experts recommend prioritizing quality stocks with strong fundamentals amid ongoing market volatility.
"Market corrections like these are often healthy in the long run, as they help bring valuations to more sustainable levels. This, in turn, creates opportunities for long-term investors to buy quality stocks at more reasonable prices. For those investing in small and midcap segments, the focus should remain on fundamentally strong companies with solid growth potential, while avoiding speculative plays during uncertain market phases," Srivastava suggested.
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