Smallcap, Midcap Stocks Plummet: Retail Investors Hit Hardest; Is it Time to Sell?

• Smallcap and midcap indices have seen sharper declines (8.1% and 5.8% respectively) compared to Sensex/Nifty (3.5%) since the year's start, impacting retail investors most.
• Two years of high mutual fund inflows inflated valuations in midcap/smallcap stocks without strong returns, leading to a rapid sell-off amid macroeconomic weakness.
• Investor rotation from SME/smallcap/midcap to largecap stocks, available at fair valuations, accelerated the decline.
• Mutual fund selling due to redemption pressure from weak returns further exacerbated underperformance in these segments.
• Experts suggest phased buying for retail investors with cash, as the broader market appears oversold, but caution that many stocks are still not cheap.

Why It Matters: Smallcap and midcap stocks are plummeting, severely impacting retail investors, but some experts see phased buying opportunities.