Why Share Market Fall: The selling in small and mid cap stocks is showing no signs of stopping. The sentiment around these shares remains weak. Due to this, most of them remain in red mark. Sensex took a dive of 1000 points on Wednesday afternoon due to selling in mid and small cap stocks. At the same time, Nifty has fallen by more than 370 points. BSE Small Cap Index was down 4.85 percent. Nifty Next-50 fell 3.72 percent and Nifty Midcap Select fell 2.91 percent. BSE Small Cap Index has been falling continuously since February 19. More than 80 percent of the shares in this index have given negative returns since February 19. At the same time, Nifty rose by about 1 percent during this period.
Operators under pressure
There are many reasons behind this decline in the small cap segment. Experts say that due to high operator activities in this segment, there was a huge rise in the shares of fundamentally weak companies. Now these operators are under pressure. Because ED has recently raided 13 other institutions including Dubai based hawala operator Hari Shankar Tibrewal who operates shares.
SEBI’s advisory is a big reason
Dr. Ravi Singh, Founder of DRS Finvest, said that the second biggest reason for the decline in small stocks is SEBI’s advisory. In this, mutual funds have been asked to protect the interests of investors amid concerns over rapidly rising valuations in small cap and mid cap schemes. However, SEBI has so far only asked for additional disclosures related to the liquidity of mutual fund portfolios. SEBI has not taken any action like stopping the inflow or ordering stake sale.
Selling due to fear of regulatory investigation
There is a growing fear that fund managers will sell stakes in less liquid stocks as liquidity has become a priority and regulatory scrutiny on portfolios is increasing. Dr. Ravi said that the selling may continue for a few more days, because mutual funds want to avoid any regulatory scrutiny. Some fund managers have termed this action of SEBI as welcome. He says that many such bad stocks were rising rapidly, which were not good for the market. At the same time, some fund managers say that the valuation in this sector had gone up considerably.
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