Nifty Smallcap index down 12% from peak; Over 50 stocks see double-digit losses
SJVN, which has corrected over 40% from its peak and has also seen a correction in its multiple, is still trading above its five-year average price-to-earnings multiple of 21x. NBCC and Angel One are similar case in points.
The Nifty Smallcap index has now declined in six out of the last seven trading sessions. This is the third straight session where the index has seen losses of 2% or more. With Wednesday's drop, the index has declined 12% from its February 8 peak of 16,691. In absolute terms, the index is down over 2,000 points from its peak.
Since February 8, only 10 out of the 100 index constituents are trading with gains, some of which even less than 1%. Over 90 stocks trade with losses, of which, nearly 54 stocks are trading with losses of 10% or higher. IIFL Finance is the worst performer during this period, but its fall has come recently post the regulatory action.
Stocks like SJVN, NBCC, Angel One, Suzlon and Finolex Cables are the top five laggards on the Nifty Smallcap index barring IIFL Finance. All of these stocks have corrected in excess of 20% since the Smallcap index topped out on February 8.
| Stock | Fall From February 8 |
| SJVN | -31% |
| Angel One | -29.5% |
| NBCC | -28% |
| Tata Teleservices | -25.8% |
| Finolex Cables | -25.2% |
Despite this correction, most of these stocks continue to trade above their historical five-year price-to-earnings average multiple. SJVN, which has corrected over 40% from its peak and has also seen a correction in its multiple, is still trading above its five-year average price-to-earnings multiple of 21x. NBCC and Angel One are similar case in points.
| Stock | FY25 P/E | Historical Average |
| SJVN | 24x | 21x |
| NBCC | 38.1x | 30.3x |
| Angel One | 15.6x | 16.5x |
| Suzlon | 32.5x | 33.3x |
| Finolex Cables | 17.46x | 24x |
Correction has also been seen in high flying PSU stocks, particularly in the railways segment. From IRFC to RVNL, most of these names have corrected in excess of 20%.
| Stock | Peak | Fall From Peak |
| IRFC | ₹ 192 | -34% |
| RVNL | ₹ 345 | -35% |
| IRCON | ₹ 280 | -32% |
| Railtel | ₹ 491 | -29.7% |
"It's quite limited and we have been talking about micro caps and small caps and SME exchange for quite some time. So the froth has been building up. And the regulators have - in a timely way - identified the pockets of risk and necessary corrective actions were already taken. Given the fact that market cap has increased so much, and we are talking about a small portion of the market, it will not be systemic and whatever we are doing in terms of controlling risk, etc. is healthy for the system. So I'm not too worried about the impact of this kind of correction in the micro and small cap segment," Mihir Vora of Trust Mutual Fund said.
First Published: Mar 12, 2024 2:40 PM IST
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