Small, midcap indices slip below crucial levels under severe selling pressure

Mumbai: The small and midcap indices have slipped below crucial levels, sparking bearishness in the markets.

Rupak De, Senior Technical Analyst at LKP Securities, said recently that the small and midcap stocks faced a bumpy ride due to SEBI's vigorous crackdown on over-speculation, prioritising the safeguarding of market participants' interests.

Both indices slipped below their recent consolidation levels, sparking increased bearishness among the market participants.

Moreover, they have dipped below crucial short-term moving averages, further dimming the overall sentiment, De said.

Largecaps have joined the correction in smallcaps and midcaps, which have been under severe selling pressure in the last few days, said Rahul Sharma, Head of Technical and Derivatives Research at JM Financial Services.

The Nifty has a derivatives support at 22,000, so any sustenance below the same should be taken as an indication of caution for longs. The only silver lining on Wednesday has been in select private banks and FMCG stocks, which have held their ground amid a market-wide selloff, he said.

Vinod Nair, Head of Research at Geojit Financial Services, said that in contrast to the global uptrend, unfavourable risk-reward balance of mid and smallcap stocks, fuelled by prolonged premium valuations, has aggravated the downfall.

Meanwhile, the FMCG and contrarian plays like gold are offering some refuge. Other than the premium valuation, no fundamental issue is noticed to drawback the long-term growth image of domestic midcaps, Nair said.