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News Topical, Digital Desk : The market may appear calm from the outside, but the Nifty500 is experiencing significant turmoil within. The index may have gained just 1% in the past year, but the situation within is completely different. 125 Nifty500 stocks have fallen more than 30% from their 52-week highs, while five stocks have plummeted by as much as 60%. This means that the decline is not limited to a select few companies, but has spread across a large segment of the market. In such an environment, investors need to proceed with caution. This index has barely returned 1% in a year, but the real problem is visible in the decline of the 500 companies included in it. Nifty500 stocks are down an average of 20% from their 52-week highs. The overall decline is 19%—meaning 250 stocks have fallen by more than 19%. This clearly indicates that the decline is not limited to a few stocks, but is widespread across the entire market breadth.
5 stocks that took the biggest hit fell by up to 60%: Tejas Networks – 65% Praj Industries – 64% Ola Electric – 60% Vedant Fashions – 60% Reliance Infra – 60%.
This decline is not a normal correction, but a sign of deep value destruction. Shares that fell 50%+—Deep Pain Zone 6 big names fell by more than half Cohance Life – 59% TARIL – 58% FirstCry (Brainbees) – 55% Jindal Saw – 53% Jupiter Wagons – 51% Newgen Software – 51% These are the companies where the valuation bubble burst rapidly.
40% or more fall—weakness across the board 28 stocks were hit by up to 40%. These include names like IGIL, Sonata Software, HFCL, ITI, Deepak Nitrite, Trent, Clean Science. This data shows that the fall is not theme-based, but broad-based.
Largecap-Midcap-Smallcap: Who got beaten the most? Largecap: 15–25% decline Midcap: 25–40% decline Smallcap: 50–65% decline Every fourth stock that has fallen by more than 30% is mostly smallcap. This means the real pain is in the smallcap space.
Why has the decline occurred? (1) Heavy selling by FIIs – sales of more than ₹6,500 crore so far in December. Selling of ₹11,500 crore in November. FII selling has a direct impact on midcaps and smallcaps.
(2) The rupee fell to a record low of ₹90.46 against the dollar. A weak rupee increases corporate costs, reduces profits, and worsens sentiment.
What should investors do? (1) Don't rely solely on the index – check the stock's performance. The index may be up, but your portfolio may be down. (2) Don't make the mistake of buying smallcap stocks just because of their falling prices. A stock that has fallen 40–60% may not be cheap, it could be bad.
(3) Currently, the Safe Zone is cash-rich companies. Stocks with low debt. High ROE/ROCE. Sectors: Banking (selected), FMCG, Pharma, Capital Goods (selected).
(4) Avoid Zone is thematic stocks with high P/E. Smallcaps with low promoter holding. Midcaps with consistently falling business.
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