Correction in the BSE SmallCap and BSE MidCap Index

BSE SmallCap and BSE MidCap index have delivered mind-boggling returns in the preceding two years. Both the indices have shot up by 67.9% and 73.1% respectively in this time span.

However, there has been some sharp correction in these indices. BSE Midcap and BSE SmallCap index have corrected by 4% and 5% respectively in the preceding week. Given the sharp surge, the recent correction does not come in as a surprise.

As per an article in leading financial daily, the price/ earnings (P/E) ratio of SmallCap index has risen to 111 times-the highest ever. This ratio indicates that the SmallCap and MidCap index could well be in a bubble territory (subscription required) as of now.

The index has surged mainly on the back of huge domestic inflows coming into mutual funds. Indian entities have been enjoying the liquidity induced music for a while now. But they got the real taste of it only in 2017 when domestic mutual funds joined the party. With about 50 to 60 billion rupees of SIP money every month, the funds were keen to join the dance floor.

Investors also should bear in mind that the liquidity tide cannot continue forever. It is bound to go out. And most funds may then want to exit the party in a hurry. Even if that means selling the stocks of some strong financial entities at throwaway prices.

Bitcoin Tumbles Below US$10,000

In the news from cryptocurrency space, Bitcoin is headed for its worst monthly slide since December 2013. From the highs of US$20,000 in December 2017, the currency has now fallen below US$10,000.

The cryptocurrency has extended its tumble lately as US regulators are ramping up their scrutiny of one of the world's largest digital currency exchanges.

While the world of digital currencies is intriguing, it can get very confusing for the layman. Indeed, a lot of people are still skeptical about the currency's future. Our own government and the central bank certainly don't like Bitcoins. And yet, it would probably not be wise to dismiss bitcoins and the blockchain industry entirely.

Budget Day- Stocks to Watch Out!

The stocks catering to the real estate sector could be in action today. The sector is in doldrums and the government may bring in some tax reforms to provide a boost to the sector. Hence companies catering to the real estate and housing finance companies could be in action today.

Further, the companies catering to the road sector and infrastructure space could also be in action as the government lays out plans to strengthen the infrastructure of the Indian economy.

Companies catering to the agriculture segment would also be in the news as the government is likely to doll out certain reforms which would be beneficial to the farmers.

Companies to Declare Quarterly Results Today

The stocks of Ashok Leyland, Akzo Nobel India, Bajaj Finance, MRF, Cera Sanitaryware, Power Grid Corporation of India, Titan are expected to be in the news as they declare their results for the quarter ended December 2017.