Won't speak on small, mid-cap valuations now

AFTER flagging her concerns about the rising froth or "the irrational exuberance" in the mid- and small cap stocks a year ago, Sebi chairperson Madhabi Puri Buch, whose term ends by this month-end, has said she does not feel the need now for making a statement on the valuations of small- and mid-caps, which have tanked 20% from their peaks.

- BENN KOCHUVEEDAN @ Mumbai

Addressing an Amfi event here on Friday, Buch said Sebi had made already a statement on small-cap and mid-cap valuations in 2024 as there was a need back then. Sebi had in February 2024 advised asset management companies (AMCs) to put in place a policy to protect investors in small- and mid-cap segments as the regulator had then felt that there was froth building up in the broader markets. "There are some companies and segments being re-rated today, which is a good thing. But there are others where the valuation parameters seem to be off the charts and not supported by fundamentals, which regulators call as irrational exuberance," she had said at an event in March 2024.

Till September, when the market peaked, which had its reflection in the small-cap and mid-cap valuations, has peaked more than the broader market did. The Sensex was sniffing at the 86,000 mark in September and both BSE small-cap and mid-cap indices gained nearly 30% during the year. However, the markets significantly fell in the following months, and so did the broader markets and there is no bottom yet, it seems.