Small & Midcap Stocks Down 2.8% in Dec: Profit Booking & High Valuations

• Midcap and smallcap stocks experienced a decline in December after a strong performance from March to October.
• The BSE Midcap Index fell by approximately 2.7%, and the BSE Smallcap Index dropped by about 2.8% in December.
• This downturn is attributed to profit booking, high valuations, and a shift by investors towards safer largecap assets.
• Despite the recent fall, midcap and smallcap valuations remain elevated compared to their historical averages.
• Unwinding of margin trading positions also contributed to the selling pressure on these market segments.

Why It Matters: Mid/smallcap stock fall signals investor shift to safer assets.