Avoid Small-Cap and Mid-Cap Stocks Amid Ongoing Correction?

https://preview.redd.it/deqbnv8rlnje1.png?width=1280&format=png&auto=webp&s=86f5bcbfc89e6d3b8c5d87942ed4fce8b4d63183 https://preview.redd.it/56qqit8rlnje1.png?width=1280&format=png&auto=webp&s=5bab36b6354b7bffbae3d49a8edea9924d0666ea The ongoing selloff in Indian small-cap and mid-cap stocks is due to high valuations, weak earnings, and selling pressure from foreign investors. Over two-thirds of these stocks have fallen more than 20% from their 52-week highs. While they have shown some resilience, analysts warn that low liquidity could lead to further declines. Given the current risks, the correction may not be over, and investors should be cautious before buying at current levels. Technically, the index has started forming lower lows. Since 2023, it had been trading above the 40-week EMA. After making a new high, the index broke below the 40-week EMA, retested it, and then declined further, breaking the previous low and confirming a lower low formation.