Media Coverage: Small-cap index likely to witness correction if earnings don’t catch up

The BSE Smallcap 250 index has experienced upward momentum following the COVID-19 crash in 2020. Seeing a hiatus for 15 months in the middle, between January 2022 and March 2023, the index has been rallying again since April 2023.

The small-cap index has surged 96 percent since April 2023 as against 34 percent rise in Sensex.

According to a recent study by Capitalmind Financial Services, the P/E multiple of the BSE Smallcap 250 has increased by 63 percent over the one-year period ending July 11, 2024, while Earnings Per Share (EPS) has remained flat at -3 percent. This suggests that the P/E multiple expansion is primarily driven by rising prices rather than earnings growth. Capitalmind warns that if earnings do not improve, there is a high probability of a price correction in the small-cap index...

Read the full coverage at: