Indian indices have been in the red in 2023 so far with the benchmark Nifty falling around 3 percent YTD. This comes on the back of a rising interest rate cycle, volatile global sentiments, rising inflation and a declining rupee.
"The US macro data continues to dictate equity markets globally. The US markets reacted sharply negatively to the series of economic data, which indicated that the process of disinflation is slow and, therefore, the US Fed will have to continue raising rates longer than expected earlier. This pushed up the 10-year bond yield sharply to 3.95 percent. These negative US equity market trends are impacting equity markets everywhere and India cannot be an exception to this trend, at least in the near-term," said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Amid this turbulent environment, three smallcap stocks have eroded over 40 percent of their investor wealth just this year so far. Let's take a look:
Music Broadcast: In 2023 YTD, the stock has shed 50 percent. It has lost 11 percent just in Feb after a 44.5 percent decline in January. In the last 1 year, it is down 47 percent. In the December quarter, the company's net profit fell 54 percent to ₹4 crore as against ₹9 crore in the year-ago period. Its revenue also fell 6 percent to ₹60 crore versus ₹64 crore in the same period last year. Music Broadcast is engaged primarily in the business of operating private frequency modulation (FM) radio stations in India. The Company owns and operates Radio City 91.1 FM. The Company is operating approximately 39 stations across 12 states. The Company also operates approximately 17 Web-stations through its digital interface.
Future Lifestyle: The stock has shed a little over 41 percent in 2023 YTD, falling nearly 21 percent in February after a nearly 26 percent fall in January. In the last one year, the stock has wiped out 88 percent of its investor wealth. Future Lifestyle is an integrated fashion company whose portfolio consists of fashion brands that cover the entire gamut of sub-categories, including formal menswear, casual wear, active or sportswear, ethnic wear, denim wear, footwear and accessories for men and women. It operates over 300 stores in 90 cities.
Mangalam Industrial Finance: The penny stock has lost nearly 42 percent in the last 1 year. It has shed 25 percent in Feb so far after a 22 percent decline in January. Even in December, the stock declined over 21 percent. In the last 1 year, the stock has lost 63 percent of its investor wealth. Mangalam Industrial Finance is a microcap non-banking financial company.
It is important to note that smallcaps and penny stocks are high-risk stocks and not suitable for risk-averse investors. One must contact their financial advisor before investing in any of them.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.