Stock market carnage hits small & mid-caps hard; Bharat Forge, Zensar Tech shares dive 10%

Domestic benchmarks BSE Sensex and NSE Nifty experienced a steep correction in Monday's trade as Asian market bled up to 10 per cent, following the crash in US stocks. The drop was even more intense in the broader indices (small-cap and mid-cap shares). Last checked, Nifty Smallcap 100 and Nifty Midcap 100 were down 5.22 per cent and 4.05 per cent, respectively.

Midcap counters such as Bharat Forge, Coforge, National Aluminium, Mazagon Dock, SAIL, Vodafone Idea, Suzlon Energy, RVNL, BSE, Hindustan Zinc, BDL, Premier Energies, Cochin Shipyard, Ola Electric, OIL and Waaree Energies slumped up to 10.16 per cent.

Smallcaps like Inox Wind, BEML, FirstCry, Jupiter Wagons, GRSE, New Gen, Afcons, Hindustan Copper, IFCI, BirlaSoft, PCBL, JBM Auto, Anant Raj, Zensar Technologies, Swan Energy, Tejas Network, Angel One and IRCON International cracked up to 10.18 per cent.

The fresh round of tit-for-tat between China and the United States raised fears of US recession, including foreign investor outflow from India and other emerging markets. There are concerns that the lack of US market access would lead China to dump its overcapacity in Asia, including India. Further, that are worries that since solutions to the tariff war would take longer, earnings forecasts for corporations globally are at risks.

"Global stock markets are going through heightened volatility caused by extreme uncertainty. No one has a clue about how this turbulence caused by US President Donald Trump's tariffs will evolve. 'Wait-and-watch' would be the best strategy in this turbulent phase of the market. There are a few things that investors should keep in mind. First, the irrational Trump tariffs will not continue for long. Second, India is relatively better placed since India's exports to the US as percentage of GDP is only around 2 per cent and therefore the impact on India's growth will not be significant. Third, India is negotiating a Bilateral Trade Agreement with the US and this is likely to be successful resulting in lower tariffs for India," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

He believes that domestic consumption themes such as financials, aviation, hotels, select autos, cement, defence and digital platform companies may come out relatively unscathed from the ongoing crisis. "Trump is unlikely to impose tariffs on pharmaceuticals since he is on the back foot now and, therefore, this segment is likely to show resilience," Vijayakumar added.