NEW DELHI: Mid-cap and small-cap stocks recovered sharply on Wednesday after the BSE on Wednesday clarified on its new add-on price band framework and said the new framework shall be applicable to securities which are priced Rs 10 or more and have a market-capitalisation of less than Rs 1,000 crore and on securities in groups — X, XT, Z, ZP, ZY, and Y. At present, there are only 31 stocks that are subjected to the new framework.
The BSE on Monday had issued a circular introducing “a new surveillance framework viz. add-on price band framework for securities listed exclusively on BSE trading platform. According to it, such stocks will be subjected to additional periodic price limits viz. weekly, monthly and quarterly price limits. Following the Monday circular, mid-cap and small-cap stocks witnessed tremendous selling pressure with hundreds of stocks hitting lower circuit in the last two sessions.
On Wednesday, the BSE SmallCap index fell 3.3% while the BSE MidCap index plunged 2% in the intra-day trade. After the BSE clarification, SmallCap and Midcap indices recovered and closed lower at 0.83% and 0.22% respectively. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that the BSE’s new surveillance framework is a timely initiative to curb excessive speculative activity in these stocks. He said the “initiative from the BSE is appropriate from the perspective of market integrity”.