Mid- & Small-Caps Correct Sharply in Dec; Valuations Stretched

• Mid-cap and small-cap stocks experienced a significant correction in December after months of strong outperformance.
• BSE MidCap and SmallCap indices dropped 2.7% and 2.8% respectively in December.
• The downturn is attributed to retail fatigue, unwinding of Margin Trading Facility positions, and stretched valuations.
• Both indices were trading at elevated valuations compared to their 10-year average forward PE ratios.
• Experts anticipate market consolidation in early 2026, with potential for a renewed uptrend later, offering accumulation opportunities for long-term investors.

Why It Matters: Mid/small-cap stock correction offers investors accumulation opportunities.