Shakeout in Indian Small-Caps Seen Luring Dip Buyers to Market

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(Bloomberg) -- This month’s meltdown in India’s smaller stocks is being termed as a buying opportunity by some investors despite the securities regulator’s...

-- This month’s meltdown in India’s smaller stocks is being termed as a buying opportunity by some investors despite the securities regulator’s warnings of a potential bubble.Bitcoin Extends Retreat From Record as ‘Bubble’ Talk EscalatesPerceived as key beneficiaries of the South Asian nation’s 8%-plus economic growth, shares of smaller firms are seen staging a comeback after a selloff that’s pushed down the Nifty Smallcap 250 Index almost 10% since Feb. 27.

The National Stock Exchange’s small-cap measure was introduced much later. It has seen two corrections — of 27% and 14% — since March 2020, only to bounce back strongly in each instance over the next six to 12 months.“This shakeout is definitely welcome,” said Deven Choksey, managing director of DRChoksey FinServ Pvt. in Mumbai. “Investors won’t mind this correction.”

Bulls say the blowout returns in smaller companies stem from robust corporate profit growth in recent years. Earnings of members in NSE’s smallcap gauge have more than doubled since 2022, outpacing the 40% jump in the index during the period, data compiled by Bloomberg show.

 

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