Mid-, small-cap cos drop in flat market

A sharp selloff in the midcap and small-cap space caught investors off guard on Tuesday.

- Ujjval Jauhari

The mid-cap and small-cap indices saw steep corrections of 3-4% during the day even as the Nifty ended just 0.02% lower but not before scaling the all-time high of 20110.35.

Valuation discomfort is likely to have set in after a sharp rally, which is leading to heavy selling in mid-caps and smallcaps, said analysts.

"As expected, we have witnessed some weakness in small and mid-cap stocks today and a rotation into defensives, especially tech, following the recent exuberance in the broader markets," said Pranav Haridasan, managing director and chief executive officer, Axis Securities Ltd.