Geopolitical Tensions Weigh on Smallcap and Midcap Indices
The broader market faced significant pressure on May 9, as escalating tensions between India and Pakistan dragged down both the smallcap and midcap indices. The Nifty Smallcap Index tumbled nearly 2%, ending at 15,866, while the Nifty Midcap Index dropped by over 1%, settling around 52,693. These losses came in the wake of heightened military confrontations between the two nations, with Indian armed forces conducting targeted strikes under the operation ‘Sindoor,’ which was followed by retaliatory missile firings by Pakistan. This situation led to continued cross-border firing, unnerving investors and exacerbating market volatility.
Highlights:
Smallcap Index down 2%; Midcap Index falls 1%.
Increased India-Pakistan tensions and weak global cues impact market sentiment.
Risk-averse market behavior prompts calls for caution.
Losers: MCX, RVNL, Suzlon Energy
On the smallcap index, MCX was the top loser, plunging nearly 6% to Rs 5,670. This decline occurred despite a strong Q4 FY25 earnings report, where the company reported a 54% YoY rise in net profit to Rs 135.46 crore. Additionally, MCX declared a final dividend of Rs 30 per share for FY25, which failed to offset market concerns amid geopolitical risks.
Meanwhile, other smallcap stocks that took significant hits included Anant Raj, Aadhar Housing Finance, Radico Khaitan, Sonata Software, and IRCON, all of which saw declines of around 3%.
Highlights:
MCX falls 6% despite strong Q4 FY25 performance and dividend announcement.
Smallcap stocks like Radico Khaitan and Sonata Software down by 3%.
Midcap Stocks Underperform: RVNL and Suzlon Energy Lead Declines
The midcap index was also under pressure, with RVNL emerging as the top loser, dropping by 3% to Rs 321. Suzlon Energy followed suit, falling over 2%. Other midcap stocks facing losses included NHPC, Ola Electric, IREDA, Godrej Properties, and M&M Finance, all of which saw declines of over 2%.
Other notable midcap stocks that faced downward pressure included Oberoi Realty, Motilal Oswal Financial Services, Dixon Technologies, Mankind Pharma, BSE, Vodafone Idea, HUDCO, SAIL, and IRCTC, all of which recorded losses of more than 1%.
Highlights:
RVNL and Suzlon Energy drop 3% and 2%, respectively.
Midcap stocks like Godrej Properties and M&M Finance fall over 2%.
Numerous other midcaps suffer losses of 1% or more.
Market Sentiment
In the face of rising geopolitical tensions, investors are being urged to adopt a cautious stance, with recommendations to avoid aggressive positions in favor of fundamentally strong stocks with limited exposure to geopolitical risks. Shrikant Chouhan, Head of Equity Research at Kotak Securities, emphasized the need for caution in light of the weak global cues and border tensions, advising investors to focus on companies with resilient financials and solid growth prospects.
Highlights:
Analysts recommend focusing on fundamentally strong stocks.
Caution urged amid ongoing geopolitical risks and weak global cues.
High geopolitical risks expected to weigh on market sentiment in the near term.
