The Nifty Midcap index itself fell 18 percent and around 45 stocks included in the index corrected in the range of 30-90 percent in the last 18 months.
After hitting a lifetime high in January 2018, the broader markets continued to underperform frontline indices. In fact, the Nifty Midcap index traded at a big discount to Nifty50 on back of sharp correction in several key stocks.
Asset quality concerns, LTCG tax imposition, liquidity crisis, consumption slowdown, debt defaults, global trade war, and crude volatility etc., have hit several stocks, which corrected sharply in the past.
The Nifty Midcap index fell 18 percent and around 45 stocks included in the index corrected in the range of 30-90 percent in the last 18 months.
"The midcap indices (Nifty 100Midcap and BSE100 Midcap) are now trading at a discount of 15 percent to the Nifty 50 (compared to historical lows of 30-40 percent discount)." JM Financial said.
"The correction followed the downward revisions to the earnings for FY19 (28 percent lower than estimated) on account of high expectations, higher share PSU financials/ stressed groups and cyclicals (industrials/ discretionary in the midcap indices being at 27.5 percent versus 12.7 percent in Nifty 50)," they added.
But, as most analysts say, the NBFC crisis is near the end and with most of the negative priced in, there is hope building. This sentiment could be renewed by the Union Budget and expected rate cuts by India's and other global central banks. Hence, the sharp rally could be seen in midcaps rather than large-caps in the coming quarters, experts said.
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