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An important ongoing trend in the market is the weakness in the broader market with sharp cuts in many mid and small-caps, says V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Many such stocks driven up by speculative buying without consideration for the fundamentals are correcting. This trend is likely to continue since many such stocks are excessively valued, he said.

The explosive growth in the number of demat accounts and the newbies chasing mid and small-caps influenced by recency bias have contributed to this froth in the broader market. A correction in this segment is inevitable and desirable, he added.

Correction will give opportunities to buy fairly valued stocks in this segment like PSU Banks, he added.

Devarsh Vakil - Deputy Head, Retail Research, HDFC Securities said after a firm opening on Monday, Nifty not only gave up all the strength but fell precipitously on the back of a sharp sell-off in PSU stocks. Nifty lost 166 points to close at 21616. Small-cap stocks received maximum beating. The BSE small-cap index lost over 1,000 points.

BSE Sensex is trading at 71,492.84 points, up by 420.35 points or 0.59 per cent. ICICI Bank is up 2 per cent.