The stock market witnessed a significant downturn today, with the smallcap index falling by 5%, marking the worst single-day fall since December 2022. This has prompted NSE MD and CEO Ashishkumar Chauhan to issue a warning to small investors who may not have the capacity to manage high-risk levels. Chauhan emphasized that investors should only enter riskier parts of the market if they can afford the risk, and leverage should be used cautiously.
ICICI Securities also weighed in on the situation, noting that the market breadth is declining, indicating a potential mean reversion in mid and small-cap stocks. The indices have seen a significant rally of 35% since October 2023, with an average correction of 12% being a norm in bull markets. ICICI Prudential Mutual Fund has announced that it will not accept lump sum investments in its mid and small-cap schemes starting from March 14.
Sebi chief Madhabi Puri Buch also expressed concerns about the froth in small and mid-cap stocks, highlighting the “off the charts” valuations that suggest price manipulation in the segment. Buch warned that the valuation parameters are not supported by fundamentals and described the current situation as “irrational exuberance.”
As the market continues to experience volatility and uncertainty, it is crucial for investors to exercise caution and carefully assess their risk tolerance before making any investment decisions. Stay informed with the latest updates on business news, gold rates, and more on Hindustan Times Website and APPs.
