Tariff woes extend smallcap selloff as over 400 stocks fall up to 53% this week

Indian markets experienced a range-bound activity in the week gone by, but the tumultuous sessions continued with initial attempts of bulls ultimately faltering. The US President's announcement of reciprocal tariffs hit export-oriented sectors hard, particularly the pharma space.

During the week, over 400 smallcap stocks delivered negative returns with 23 of them falling in double-digits. Suratwala Business Group was the top loser with a negative 53% return, followed by Best Agrolife (-31%), Dee Development Engineers (-27%), and PTC Industries (-21%).

On the flip side, 52 stocks including KDDL, Sandur Manganese, Pennar Industries, Taj GVK Hotels, IKIO Lighting, Benares Hotels have offered returns between 10-40% during the week.


In the BSE500 segment, nearly 225 stocks ended with cuts. Mahindra Logistics, Carborundum Universal, Vakrangee, CreditAccess Grameen, Natco Pharma, Crisil, Mahindra and Mahindra, Jamna Auto, The India Cements were among the worst losers.

From the Sensex pack, NTPC topped the charts with 8.6% returns, followed by Zomato at 7% and Tata Steel at 5%. Overall, while half of the index constituents made gains, the other half succumbed to selling pressure.

Adding to the market's woes during the week was the hawkish stance from the FOMC minutes, which cast a shadow over the likelihood of further rate cuts, complicating the economic outlook.

What should investors do?

India is currently lagging behind its Asian peers, as FII outflows remain high, with the "sell India, buy China" strategy continuing to yield returns for the time being.

Going forward, investors are keeping a close eye on upcoming pivotal indicators, such as the US Core PCE Price Index and India's GDP growth rate.

Analysts say weak investment sentiment for emerging markets, news flow on tariffs and monetary policy outcomes is expected to influence equity markets in the near term.

"The market's mood remains cautious, with pessimistic sentiments likely to linger until there is a marked improvement in corporate earnings and a conducive environment with easy global liquidity and stabilised currency," said Vinod Nair, Head of Research, Geojit Financial Services.

Technically, analysts say Nifty ended the week at a multi-day low amid increased bearish sentiment. The RSI (14) also has entered a bearish crossover.

"On the lower end, a correction towards 22,500 looks possible in the short term, while on the higher end, 22,850 might continue to remain a strong resistance," said Rupak De, Senior Technical Analyst at LKP Securities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)