It's a well-known fact that when the markets go up, the mid-caps and the small-caps stocks are the ones that witness the maximum gains. Similarly, when markets go down, these are the stocks one usually finds at the bottom. 
While Sensex was up 25 per cent in 2012, BSE Midcap Index notched up 38.5 per cent in gains. But the situation seems to be changing if the first few months of 2013 are anything to go by. While the Sensex has fallen by just 1 per cent, the BSE Midcap index is down as much as 10.71 per cent. An important reason for this underperformance is that these companies came under pressure mainly on account of lower than expected Q3 earnings and speculations regarding the sell-off of pledged shares of these companies. Further, these stocks came under redemption pressures from various domestic institutions because of calls triggered at various domestic brokerages.
However, not all the mid-cap companies have been affected by this and as valuations start looking reasonable, investors can look to invest with a long-term view. Of the 250 companies under the BSE Midcap index, 205 are in the red. While the remaining 45 companies have posted returns in line/better than the Sensex.
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