Sharp Fall in Stock Market, Small Cap down by 1000 points

On Monday, a number of factors led to a steep decline in India's main indexes, including the ongoing weakness in banking and financial equities and the collapse in mid- and small-cap stocks. Other notable elements included a rush for profit-taking and contradictory patterns in international markets. The Nifty50 fell more than 200 points, and the 30-stock S&P BSE Sensex fell 670 points to the day's low of 70,922.57. In the end, the Sensex closed at 71,072.49, down 523 points, or 0.73%, while the Nifty was down by 166.45 points or 0.76% at 21,616.05.

During the intraday trade, the small-cap index shed more than 1000 points, giving it the worst beating possible. The small-cap index saw a weaker opening today and reached an intraday low of ₹44,476—roughly 1175 points below its closing Friday of 45,650.

Manish Choudhary, Head of Research at BP Equities, explained why investors are punishing small-cap firms so harshly in the stock market: "There has been a correction in the mid and small-cap space as valuations looked stretched in select pockets." PSU stocks, particularly those in the power, railroads, military, and PSB sectors, have seen a significant decline, and it appears that these companies have reached their near-term peak.