Watching the Sensex can be misleading-- India's mid and small cap stocks have lost ₹2.4 trillion of investor wealth this year alone

  • The Sensex is up over 8% for the year but the stocks outside the blue-chip space have swung in exactly the opposite direction.
  • The BSE midcap index has lost 6% and the small-cap index has lost a little less than that.
  • The total wealth lost by investors in smaller Indian companies is ₹2.4 trillion this year alone.
  • There are at least 125 stocks that have lost anywhere between 30% and 100% in the last one year
The Sensex is up over 8% for the year but the stocks outside the blue-chip space have swung in exactly the opposite direction. The BSE midcap index has lost 6% and the small-cap index has lost a little less than that. The total wealth lost by investors in the two indices is ₹2.4 trillion this year alone.

India's economic growth hit a five-year low in the first three months of 2019. Simultaneoously, a crisis exploded in India's financial sector with giant infrastructure lender IL&FS going down. The regulators are are still dealing with but in the mean time, it has led to a cash crunch, a trust deficit, and therefore, reduced risk appetite.

Top 25 mid-cap stocks that have eroded the maximum investor wealth in the last one year ending June 20.

DHFL-89.40%
RELIANCE INFRA -88.90%
RELIANCE POWER-86.60%
RELIANCE CAPITAL-86.20%
IIFL HOLDINGS-79.00%
CENTRAL BANK-70.10%
WOCKHARDT-53.00%
EDELWEISS FINANCIAL-45.00%
KIOCL-42.50%
SAIL-42.10%
IDBI BANK-41.90%
EMAMI LTD-41.60%
ICICI SECURITIES LTD-40.20%
SHRIRAM CITY UNION-40.10%
NATCO PHARMA-39.00%
SUN TV-39.00%
HUDCO-35.10%
JINDAL STEEL & POWER-34.60%
NBCC (INDIA) LTD-32.50%
MRPL-31.90%
L&T FINANCE HOLDINGS-31.90%
BALKRISHNA INDUSTRIES-31.60%
NALCO-31.40%
BHARAT FORGE-31.30%
PNB HOUSING FINANCE LTD-30.30%

Making matters worse is a global economic slowdown and the nagging fear of a full-blown trade war between the US and China that may further dent recovery prospects. "Mid-caps or small-caps in general are smaller businesses and, on an average, are less strong than their large-cap counterparts. Investors need to be aware of this risk and not go blindly after the entire universe, expecting higher returns," said Samit Vartak, founding partner and chief investment officer of SageOne Investment Advisors LLP told the Livemint earlier this month.

Top 100 small-cap stocks that have eroded the maximum investor wealth in the last one year ending June 20.

ASHAPURA INTI.-99.30%
MERCATOR LTD-94.40%
LEEL ELECTRICALS LTD-94.10%
JET AIRWAYS-92.60%
KWALITY-92.30%
PUNJ LLOYD-91.80%
RELIANCE COMMUNICATIONS-91.70%
ADLABS ENTERT.-89.90%
MCLEOD RUSSEL-88.20%
8K MILES SOFT-87.10%
KRIDHAN INFRA-86.70%
ROLTA INDIA-86.60%
ARCOTECH-85.80%
JAIPRAKASH ASSO.-85.70%
RELIANCE HOME FINANCE LTD-85.60%
THE BYKE HOSPITALITY-85.20%
ARVIND-85.00%
SINTEX PLASTICS TECH.-83.40%
JBF INDUSTRIES-83.10%
OPTIEMUS INFRACOM-83.00%
SPML INFRA-82.60%
KISAN MOULD.-82.30%
EROS INTERNATIONAL-81.60%
MANPASAND BEVERAGES-81.40%
BALLARPUR INDUSTRIES-81.30%
SITI NETWORKS LTD-81.20%
SINTEX INDUSTRIES-81.10%
ATLANTA LTD-80.30%
NAVKAR CORP.-79.60%
KUSHAL TRADELINK-79.40%
PG ELECTROPLAST-78.90%
WINDSOR MACHINES-78.30%
VIP CLOTHING LTD-77.20%
SREI INFRA FINANCE-76.90%
PARSVNATH DEV-76.80%
JAIN IRRIGATION-76.50%
EMAMI INFRA-76.30%
BL KASHYAP & SONS-76.00%
IGARASHI MOTORS-75.80%
SIMPLEX INFRA-75.80%
ANSAL PROPERTIES-75.40%
S CHAND AND COMPANY LTD-75.40%
BOMBAY RAYON F-74.80%
JAYPEE INFRATECH-74.30%
IL&FS INV. MANAGERS-74.20%
FIBERWEB (INDIA) LTD-74.00%
VIVIMED LABS-72.80%
ABAN OFFSHORE-72.70%
SHANKARA BUILDING PRODUCTS LTD-71.70%
COX & KINGS-71.70%
RELIANCE NAVAL & ENGINEERING LTD-71.50%
EVEREADY IND.-71.20%
INFIBEAM AVENUES-71.20%
SHREYAS SHIPPING-70.60%
SKIPPER-70.30%
SUN PHARMA ADV. RES.-69.70%
JAIN IRRIGATION DVR-69.30%
HUBTOWN LTD-68.90%
PENINSULA LAND-68.80%
PC JEWELLER-68.50%
DB REALTY-68.50%
FUTURE MARKET-68.30%
KSK ENERGY-67.50%
KESAR PETROPRODUCTS LTD-67.20%
ASHAPURA MINECHEM-67.10%
HCL INFOSYS-66.80%
VETO SWITCHGEAR CABLE-66.70%
AKSH OPTIFIBRE-65.50%
L. T. FOODS-64.20%
BHARAT SEATS-64.20%
KHADIM INDIA LTD-63.80%
HOTEL LEELAVENT.-63.80%
KSE-63.60%
ARROW GREENTECH LIMITED-63.50%
BPL LIMITED-63.40%
ZEE MEDIA CORP.-62.90%
HOV SERVICES-62.80%
MULTIBASE INDIA-62.80%
NAGARJUNA FERTILIZERS & CHEM.-62.60%
PRABHAT DAIRY-62.40%
CEREBRA INTE-62.20%
PATEL ENGG.-62.00%
DISH TV-61.60%
INDIABULLS INTEGRATED SERVICES-61.60%
GRAVITA INDIA-61.50%
GEOJIT FINANCIAL SERVICES-60.40%
CAPITAL TRUST-60.30%
HEG-60.20%
ZUARI AGRO-60.00%
TRIBHOVANDAS BHIMJI-60.00%
NITCO-60.00%
IRB INFRA.-59.40%
GANESH HSG CORP-59.30%
JK AGRI GENETICS-59.10%
SETCO AUTOMOTIVE-58.60%
ASHIMA LTD.-58.50%
DECCAN GOLD MINES-58.20%
RATTANINDIA INFRA-58.20%
JINDAL STAINLESS-58.20%
BHANSALI ENG-58.20%

There are those who believe that the steep fall makes spaces for a rebound. “Mid- and small-cap indexes have slumped from their peak in January 2018 and, because of the time and price correction, there’s an opportunity in these stocks," Dhiraj Relli, chief executive officer at HDFC Securities Ltd., said in an interview at his office in Mumbai.

Five years ago, stocks from the sapce had a historic rally after Narendra Modi was voted in as the Prime Minister. The fact that he has further strengthened the government's legislative power in the Parliament has also stoked hopes of a repeat rally in the stocks of these smaller companies. However, the hopes did not materialise.

Tushar Pradhan, chief investment officer at HSBC Global Asset Management (India) Pvt. Ltd, had a word of caution earlier this month,“It would be wishful thinking to expect mid- and small-caps to repeat their performance seen post 2014 polls. Valuations may seem to be fair, but they have to be backed by earnings growth." And earnings growth does not accelerate in a weak economy.



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