Sebi probing smallcaps a warning bell for microcaps; time to exit: Analysts

Analysts expect volatility in micro-cap stocks to continue in the near-term. They recommend limiting exposure to the segment

Micro-cap stocks are in the line of fire as market regulator Securities and Exchange Board of India (Sebi) is tightening its noose around investment in small-cap stocks. Given this, analysts suggest investors exit the segment, at least, for the time being.

Independent market analyst, Ambareesh Baliga, for instance, said that regulators have gotten worried on the valuation front, though belated, which could prove to be the last straw on the camel's back.

"Until recently, corrections in microcaps were seen as a buying opportunity, which proved right as well. But when valuations become super expensive, the safety net is non-existent. It's