Smallcap stocks slip further into bear grip as sell off continues

Despite a 23% drop from the peak, valuations still above long-term averages

Smallcap stocks slipped further into bear market territory on Tuesday, driven by relentless selling by foreign portfolio investors (FPIs), worries over expensive valuations and tepid corporate earnings outlook.

 

The Sensex and Nifty traded moderately lower and the Nifty Smallcap index dropped 1.6 per cent.

 

Since its peak on December 12, the Nifty Small Cap 100 has declined by 23 per cent but valuations are still above long-term averages. A stock or index is considered to have entered bear market territory when it falls more than 20 per cent from its peak.

 

The sell off has led to sharp declines among