Financial institutions bought a record number of local shares in a single day, profiting from the steep selloff in small and medium-sized businesses.
A net of $1.1 billion worth of shares were purchased by investors, including mutual funds, banks, and insurers, according to Bloomberg statistics. Provisional data indicates that foreigners sold equities at a net of $555 million.
On Thursday, the market recovered, with a measure of smaller businesses rising as much as 2.9%—the highest level of growth since December 2022. The index has dropped around 10% from its peak in February and is currently in correction territory.
Through Wednesday, the selloff has removed about $80 billion from the small-cap gauge’s value in only two weeks, following the securities regulator’s concerns over the segment’s bloated valuations. The metric saw a roughly 75% increase from March 2023 to February 2023, mostly due to robust corporate profitability and economic development.
According to international stockbroker Jefferies, the situation is not a replay of 2018, when the smallcap index had a correction of more than 45%. Instead, it is just another good correction rather than a “meltdown.” Given the spike in small- and midcap volumes and the robust inflows into mutual fund schemes, Jefferies did not rule out more corrections in the broader market, but it did point to examples where a period of dramatic market surges was followed by corrections, as CNBC TV18 reported.
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