There was a sharp decline in the stock market on Tuesday and the major index closed with a decline of more than one percent. This one percent decline is heavy for the market because the market has already fallen a lot. According to experts, the biggest concern of the market is the high valuation of small and medium stocks amid weak signals from the country and the world. And the most worrying thing is that even after this decline, the tension of high valuation has not ended. Take a look at these figures

The stock market has slipped below

its important levels. Nifty is currently 4 percent below its 200 DMA (200-day moving average). At the same time, according to Bloomberg data, about 84 percent of the Nifty 500 index is trading below its 200 DMA. Slipping below 200 DMA is considered a negative sign for long-term investment. Not only this, Sterling and Wilson Renewable, Honasa Consumer, Whirlpool of India, Adani Green Energy and Chennai Petroleum Corporation are also 40 to 50 percent below their 200 DMA. Amidst this decline, Nifty Midcap 100 has declined by more than 16 percent since September 2024. At the same time, Nifty Smallcap has fallen more than 18 percent from its December highest level. What is the tension The biggest tension of the market is that even after such a decline, the situation regarding valuation has not improved much. According to Bloomberg data, the Nifty Midcap index is trading at 29 times its one-year forward earnings and the Nifty Smallcap index at 22 times. The level of this valuation can be gauged from the fact that the average of the last 5 years is 26 times and 18 times. According to experts, if there is an expectation of growth in the economy, demand and earnings, then in some cases investors do not worry about valuation. However, when the quarterly results are disappointing, the fear of valuation is dominating. What is the opinion of experts? According to market expert Anand Tandon, it was believed for a long time that the earnings and valuation of midcap and smallcap are not going together. According to him, the valuation is high and almost all the market experts were advising to exit from small stocks. Now the pressure of apprehensions regarding valuation has come to the fore. At the same time, New York University Finance Professor A Damodaran has already said that at present India is the most expensive market in the world and no reason makes such valuation rational. There is a fear that if the situation regarding growth and demand is not positive, then the sentiments among global investors may worsen further.