Midcap, smallcap stocks tumble up to 6%: BSE, Angel One, Lupin among top losers

Broader markets recorded a notable decline on July 8, underperforming benchmark indices. The midcap and smallcap indices dropped nearly 1 percent in the morning, buoyed by multiple factors.

The Nifty Midcap index has now extended losses for the third consecutive session, while the Nifty Smallcap index stood in the red for the second straight day. Sensex and Nifty meanwhile were flat with minor gains and losses.

Capital market stocks:

Capital market stocks led losses in the broader markets, as the fallout from SEBI's crackdown on Jane Street for allegedly using manipulative strategies to profit from Indian stock market indices continued to weigh. Angel One and MCX shares dropped up to 6 percent in the morning, emerging as the top losers on the smallcap index. CDSL shares meanwhile fell over 2 percent.

BSE shares meanwhile were the top loser on the midcap index, falling over 6 percent. The selling pressure in the capital market stocks further intensified as reports suggested that the SEBI board is likely to consider linking link options and cash exposure. This will likely increase cash market liquidity, while curtailing options liquidity. CDSL shares also fell.

Pharma stocks:

The pharma stocks were also among the top losers in the broader market, as US President Donald Trump's tariffs rattled global markets. Trump on July 7 issued letters with new tariff rates to around 14 countries. The new import tariff rates will be applicable from August 1. Notably, the US President is expected to issue more such letters this month.

Notably, the tariff letters and the expectations of more such letters in the future may have triggered worries over India receiving once before it can conclude its trade deal with the country.

Aurobindo Pharma, Lupin and Alkem Labs shares were among the top losers on the midcap index, falling up to 4 percent. Notably, Macquarie has double downgraded Aurobindo Pharma to 'underperform' from 'outperform', and reduced its target price by 40 percent to Rs 1,010 per share, Zee Business reported. The brokerage also cut the target price for Lupin to Rs 2,350 apiece, but maintained its 'outperform' rating.

Defence stocks:

Some defence stocks were also among the top losers on the broader markets, as easing global geopolitical tensions cooled down the earlier rally seen in the segment. Solar Industries and Cochin Shipyard shares dropped nearly 2 percent each, emerging as two of the top losers on the midcap index. On the smallcap index, GRSE and BEML shares fell up to 2 percent.

Other notable smallcap and midcap stocks which recorded notable losses include Paytm, IRCON, Go Digit, Kaynes Tech, MGL, Bharti Hexacom, Bandhan Bank, Bharat Forge, Ola Electric Mobility, Union Bank, Kalyan Jewellers and more.

"Our assessment of a large set of concurrent indicators shows that India’s macro recovery is still WIP. Consumption growth remains weak, barring some bright spots, and government capex growth is driven by a temporary weak base. Monetary transmission has yet to become visible. This does not affect our central thesis of a 2HFY26 recovery, although the lack of visible growth cannot be ignored. We turn cautious on the markets for now, with the Nifty anyway set to touch our Mar-26 target of 26,000. We think the broader markets will mark time before growth triggers become more visible," said Emkay Global Financial Services.

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