SmallCap index down 3%; IIFL Securities, Geojit freeze in 10% lower circuit

PC Jeweller, MTNL, Kitex Garments, 63 Moons Tech, Genus Power, Refex Industries, Solara Active Pharma, and Suraj Estates Developers were locked in 5 per cent lower circuit on the BSE.

Shares of smallcap companies were under pressure on Monday, as they fell by up to 12 per cent on the BSE after a sharp sell off in Indian equities during the day.

Foreign institutional investors (FII) selling Indian equities to book profits here and redirect funds into the Chinese markets was one of the primary reasons for the decline in Indian equities.

Other factors, including geo-political one, Securities and Exchange Board of India's (SEBI) new norms for trading in Future & Options (F&O) segment, along with October month's seasonality also played a key role, according to market analysts.

At 11:13 AM, the BSE SmallCap index, the top loser among broader indices, tanked 3.3 per cent. In comparison, the BSE MidCap index had slipped 2 per cent and BSE Sensex was down 0.5 per cent.

A total of 32 stocks from the BSE Smallcap index had locked in lower circuit and no buyers were seen on these counters. Geojit Financial Services (Rs 134.15) and IIFL Securities (Rs 357.35) were locked in 10 per cent lower circuit on the BSE in intra-day trade. 

PC Jeweller (Rs 150.90), Mahanagar Telephone Nigam Limited (Rs 52.14), Kitex Garments (Rs 502.30), 63 Moons Technologies (Rs 369.40), Genus Power Infrastructures (Rs 362.65), Refex Industries (Rs 516.65), Solara Active Pharma Sciences (Rs 727.60) and Suraj Estates Developers (Rs 712.30) were among stocks locked in 5 per cent lower circuit on the BSE.

That apart, shares of PG Electroplast tanked 12 per cent to Rs 538.40 on the back of heavy volumes. Despite a 22 per cent fall from its record high level of Rs 694.50 that it touched on September 25, the stock of the consumer electronics company has zoomed 136 per cent thus far in calendar year 2024.

In comparison, the BSE Smallcap index has rallied 27 per cent during the same period.

In a sudden U-turn in FII strategy, FIIs turned massive sellers in the Indian market in October. During the three trading days in the month, FIIs have sold equity worth Rs 30,718 crore in the cash market, according to provisional data. The selling has been mainly triggered by the outperformance of Chinese stocks.

Globally, stock markets have been resilient despite the escalating tensions in the Middle East. The Indian market has been following a different path, with the Nifty 50 declining 4.5 per cent in the past week. This sharp correction has been mainly triggered by the massive FII selling in the cash market which reached Rs 40,509 crore during the last four days.

"This correction is an opportunity for long-term investors since the valuations of these stocks are fair and prospects look good. DIIs flush with funds will continue to buy the beaten down quality stocks," said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Meanwhile, Amit Goel, co-founder and chief global strategist of Pace 360, believes the worst of the geo-political impact and China-related issues is now behind us.

“We began purchasing equities in a significant way yesterday and will continue to do so in the coming days. In the short term, we are positive about the markets. However, longer term, we remain cautious due to deteriorating global macroeconomic conditions and high valuations,” Goel said.