India’s broader indexes, BSE Midcap and BSE Smallcap have turned negative, with losses in six of seven sessions as global stocks fell.

The BSE Midcap index hit a two-month low of 24,762, down 2%, while the BSE SmallCap index hit a four-month low of 27,710, down 2.5%. Both indexes posted their most significant losses since September 26.

Over the past six sessions, BSE Midcap has fallen more than 6.3%, and BSE Smallcap has lost 7.8%. So far this year, the two indexes are down 0.7% and 6%, respectively. Benchmark Sensex and Nifty fell nearly 1% on Friday and are up almost 3.5% this year.

BSE MidCap and Smallcap are already under pressure. They did not participate in the recent rally after many analysts pointed to higher valuations than the benchmark Sensex and Nifty indices. The weak performance also came after both indexes reported weaker-than-expected earnings for the September quarter.

Most recently, Bank of America said in its 2023 outlook that large-caps would outperform mid-caps and small-caps as investors search for safety amid volatility.

Analysts said stocks could face challenges in 2023 as the global economy could slow sharply. India’s growth will also be affected by the slowdown in the worldwide economy. Analysts expect modest growth in corporate earnings.

Global stock markets were under pressure on fears of a US recession. Expectations that the Federal Reserve could raise interest rates further in its next policy move to tackle inflation and surging coronavirus cases in China and Japan also dented sentiment.

Earlier, the Bank of Japan revised the tolerance range for yield curve control while maintaining its ultra-low benchmark interest rate stable. Bloomberg reported that Bank of Japan Governor Haruhiko Kuroda said the central bank would not hesitate to further ease monetary policy, given the many uncertainties facing the economy.

Domestically, RBI minutes hinted at another rate hike at its next policy meeting, while the authorities’ covid advice also dampened market sentiment.