 "Smallcap index slips 4%, hits 7-month low; Netweb, Newgen, Solara tank 10%")
Shares of smallcap companies are under pressure, with the BSE Smallcap index slipping 4 per cent in Monday’s intra-day trade, and hitting an over seven-month low following a sharp sell-off in equities. The BSE Smallcap index hit an intra-day low of 48,018 on the BSE. It is trading at its lowest level since June 6, 2024, when the index had hit a low of 47,386.41 in intra-day trade.
CreditAccess Grameen, Netweb Technologies India, Newgen Software Technologies, Alldigi Tech, Dhani Services, Tejas Networks, Solara Active Pharma Sciences and K P Energy, all constituents of the smallcap index, have tanked between 10 per cent and 18 per cent in intra-day trades so far today.
Motilal Oswal Financial Services (MOFSL), Siyaram Silk Mills, Anant Raj Industries, Balu Forge, Greaves Cotton, Zen Technology, Ador Welding, Pokarna and Sportking India were down in the range of 8 per cent to 9 per cent.
At 10:26 AM, the BSE Smallcap index, the top loser among broader market indices, was down 4.2 per cent, as compared to the 2.7 per cent decline in the BSE Midcap, and the 0.80 per cent fall in the BSE Sensex. Thus far in the month of January 2025, the smallcap index has plunged 13 per cent, as against the 10 per cent decline on the Midcap index and 3.3 per cent fall on BSE Sensex.
"The market sentiment has turned weak. Sustained foreign portfolio investors (FPIs) selling (Rs 69,000 crore in January, so far) is impacting the market. Despite domestic institutional investor (DII) buying of Rs 67,000 crore in January, so far, the market is under pressure," said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
"A major concern is that President Trump is coming up with new threats like the 25 per cent tariff on Columbia for its refusal to take back deported illegal immigrants. The threatened 25 per cent tariff on Canada and Mexico might be implemented from February 1st onwards. Therefore, will Trump walk his talk on other threats including tariffs on China and other countries, is a question that is being asked in economic and market circles now. These concerns are weighing on the markets," Vijayakumar added.
Among individual stocks, shares of CreditAccess Grameen hit a 34-month low of Rs 750.05, as they tanked 18 per cent on the BSE in Monday’s intra-day trade after the company reported a loss of Rs 99.5 crore in the December 2024 quarter (Q3FY25), led by higher provisions, at Rs 752 crore. The company had made the impairment provision for financial instruments provision of Rs 126 crore in Q3FY24, and Rs 420 crore in Q2FY25.
Also Read
It had reported a net profit of Rs 353.42 crore in the same quarter last financial year (Q3FY24). Its net interest income (NII) increased by 7.4 per cent year-on-year (YoY) to Rs 861.7 crore in Q3FY25, compared to Rs 802.4 crore in Q3FY24.
The stock price of the country’s largest Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI) is quoting at its lowest level since March 2022. It has fallen below its previous low of Rs 810.10 on December 20, 2024. The market price of the company has more than halved, or declined 55 per cent, from its 52-week high level of Rs 1,659.95 hit on February 12, 2024.
CreditAccess’s financial performance for the period reflected the challenging conditions in the MFI sector, characterised by elevated credit costs, sequential decline in loan portfolio for the third consecutive quarter, and higher field-level employee turnover. Given the pressure on both growth and asset quality, analysts at Nomura cut FY26F/27F EPS by 16 per cent/13 per cent.
"Though CreditAccess emphasised on reversing delinquency trends, guiding 18-20 per cent GLP growth, and 17-19 per cent RoE in FY26F, we find it difficult to achieve due to further accelerated write-offs and stress in Karnataka and Tamil Nadu which form 50 per cent of its loan book," the brokerage firm said in the company's results update, with built-in lower RoE of 14-17 per cent over FY26-27F.
Shares of Netweb Technologies India (down 12 per cent at Rs 1,617), and Newgen Software Technologies (down 10 per cent at Rs 1,057.05) have slipped up to 12 per cent on the BSE in intra-day trades so far today. In the past eight trading days, the market price of the information technology companies have tanked 34 per cent and 40 per cent, respectively.
Netweb is India’s leading high-end computing solutions (HCS) provider, with fully integrated design and manufacturing capabilities. Netweb’s HCS offering comprises HPC, private cloud and HCI, artificial intelligence (AI) systems, and enterprise workstations, High performance storage (HPS) and data centre servers.
Newgen is the leading provider of AI-enabled unified digital transformation platform with native process automation, content services, and communication management capabilities.
AI stocks elsewhere, including on Wall Street, have come under scrutiny, with China-built large language model Generative AI startup DeepSeek's app emerging as the No. 1 free app on the iOS app store. This has brought megacap US tech stocks on Wall Street are under scrutiny.
DeepSeek recently launched a free, open-source AI model that it claims is at least the equal of more established models like ChatGPT on many levels, but built at a fraction of the cost. It has also positioned itself as a free alternative to ChatGPT amidst talks of the latter's intention to become a for-profit company. Wall Street analysts are concerned whether DeepSeek will pop the US AI bubble.
That apart, shares of Tejas Networks have slipped 13 per cent to Rs 861.45 in intra-day trade so far today, plunging 21 per cent in two trading days. The company reported a profit after tax (PAT) of Rs 166 crore for the third quarter ended December 2024 (Q3FY25) as against a PAT of Rs 275 crore seen in Q2FY25. This was a decline of 40 per cent quarter-on-quarter (QoQ). The telecom equipment and accessories company had posted a loss of Rs 45 crore in the year ago quarter. Tejas Networks said it had an order book of Rs 2,681 crore at the end of Q3FY25, as against Rs 4,845 crore at the end of Q2FY25.