Sharp earnings downgrade, uncertain outlook impede small-cap recovery

Small-cap index still down 17% YTD, even as Nifty50, mid-cap indices back in green.

The Nifty Smallcap 100 Index is down 17 per cent year-to-date, even as the benchmark Nifty50 and the Nifty Midcap 100 are back in the green. Sharp earnings downgrade and an uncertain outlook have impeded recovery in shares of smaller companies from this year’s lows, say analysts.

According to a recent report by BofA Securities, the earnings estimate for the Nifty Smallcap Index has been cut 7 per cent and 1 per cent for 2022-23 (FY23) and 2023-24 (FY24), respectively, this year.

By comparison, the Nifty Midcap pack has seen earnings upgrade of 5 per cent and 8.7 per