Stock Market View | Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services



In the near-term investors should focus on the sustained weakness in the broader market, particularly the Smallcap segment. The excessive valuations in these segments driven by the irrational exuberance of retail investors has been a concern for many months now. But it has taken the strong message from the regulator SEBI to trigger a correction in the Nifty Smallcap index by 10% from the February 8th peak. It is important to understand that 396 stocks are in the lower circuit indicating that there is more pain to come in this segment. Actions from mutual funds also indicate the excessive valuations in the broader market. ICICI Pru has joined two other leading funds in stopping lump sum investments in their mid and smallcap schemes. More are likely to follow.LargecapThe net impact of this shift would be more money flowing into largecaps. outperformance is likely to continue.