New Delhi. The downtrend in the stock market continues. Today, on Monday, November 18, the first day of the trading week, the market witnessed selling and the Sensex-Nifty closed in the red. The recent downtrend in the market has brought lines of worry to the foreheads of investors. The correction in the stock market has badly affected the small-cap and mid-cap stocks, in which the bears have strengthened their grip on more than two-thirds of the stocks.

According to data from the National Stock Exchange (NSE), 67 percent of the 1,020 stocks in these segments have fallen more than 20 percent from their 52-week highs. It is worth noting that 936 of these stocks had touched their 52-week highs in early 2024 but suffered a sharp decline amid market weakness.

There is less selling pressure in these sectors.
Analysts believe that there are several reasons behind this decline, including earnings disappointment and high valuations, which have weakened investor sentiment. Despite aggressive selling in Indian stocks by foreign portfolio investors (FPIs), ICICI Securities recently reported that small-cap and mid-cap indices have performed better than the Nifty. This indicates that there is less selling pressure in these sectors. However, the brokerage warns that these stocks may remain vulnerable in a risk-on environment, as their low liquidity can increase losses.

FPIs reduced
their stake in Indian stocks to a decade-low of 16 percent by the end of October, while mutual funds invested Rs 64,700 crore, of which Rs 12,100 crore was invested in mid, small, and micro-cap stocks.