Winning Bizness Desk

Mumbai. The recent market slump in India has hit the Nifty 500 hard, with 83 stocks—around one in every six—dropping over 20% from their peak values. This downturn has seen significant corrections in well-performing small and mid-cap stocks, many of which have declined between 15% and 25% in recent weeks. Benchmark indices like the BSE Sensex and NSE Nifty 50 have also taken a hit, slipping around 7.5% from their all-time highs recorded on September 27, 2024. The Sensex, previously at a peak of 85,978, and the Nifty 50, which reached a high of 26,277, have both receded significantly. During this period, the Nifty 500 index has fallen by nearly 9%. This widespread decline has investors closely watching market dynamics and weighing the risks and potential opportunities amidst a challenging period for Indian equities.

Declines being attributed to weak Q2 earnings

The sharp declines are being attributed to weak Q2 earnings, geopolitical instability, and continued foreign investor sell-offs. This volatility follows a strong rally earlier this year, where the Nifty 50 index climbed by 21%, and the Nifty 500 surged by 26.5%. The Nifty 500’s performance during both the rally and recent downturn reflects its heightened responsiveness to market trends.

High-quality stocks are now attractively priced

Analysts see potential in current valuations, suggesting that several high-quality stocks are now attractively priced for medium- to long-term investments. Despite the market's recent shakiness, economic fundamentals remain robust, and the outlook for mid-term growth is positive. Experts anticipate that Middle Eastern conflicts may lead to more volatility, yet the market could stabilize similarly to how it adjusted following the Ukraine-Russia crisis. Equinomics Research’s founder, G. Chokkalingam, recommends gradually increasing investments in high-quality small and mid-cap stocks, noting that the risk may be justified at current prices.

What are the hardest-hit stocks ?

Investor concern typically heightens when stocks dip more than 20% from their peak, a signal that sometimes points to potential trend reversals. Among the hardest-hit stocks are Poonawalla Fincorp, Intellect Design Arena, Phoenix Mills, PNC Infratech, Vodafone Idea, and IndusInd Bank, all of which have seen losses exceeding 30%. Other notable stocks facing substantial declines include HFCL, IFCI, BHEL, RITES, SCI, L&T Finance, Avenue SuperMarts, RBL Bank, InterGlobe Aviation, MRPL, RVNL, SAIL, Mahindra Finance, TTML, Oil India, SJVN, IDFC First Bank, GMR Airports, Delhivery, and Suzlon.