Mid- and small-cap stock indices not yet out of the woods, say analysts

The proposal to increase public float, hike income tax surcharge, move to tax share buybacks and lack of stimulus to shore up economic growth has hurt investor sentiment

Mid- and small-cap stock indices have underperformed large-caps so far this year, and also since the Union Budget on Friday. Analysts say there could be more pain in store for the broader markets.

The proposal to increase public float and hike income tax surcharge, which will not just be applicable to high net worth individuals (HNIs) but also to foreign portfolio investments (FPIs), has hurt investor sentiment. Besides, the move to tax share buybacks and lack of stimulus to shore up economic growth had added to investor woes. 

Analysts say the markets will continue to remain under pressure, especially the mid-and small-cap