Indices fall as valuation woes trouble investors
"The investors in the markets are worried after the corrections seen this week," said Sandeep Raina, Executive VP- Research, Nuvama Professional Client Group. "Although there is no actual change in the markets after yesterday's up move and the corrections."
Mumbai: Indian equity dropped almost half a percentage point Friday, paring Thursday's gains, as discomfort continued to weigh on after regulatory caution over likely bubbles in the riskiest pockets of assets. Of the 50 stocks in Nifty, 11 advanced and 39 declined."The investors in the are worried after the corrections seen this week," said Sandeep Raina, Executive VP- Research, Nuvama Professional Client Group. "Although there is no actual change in the markets after yesterday's up move and the corrections."
BSE's fell 0.62% or 453.85 points to close at 72,643.43 while Benchmark Nifty declined 0.56% or 123.3 points to close at 22,023.35.
The indices gained over 0.5% on Thursday, after crashing over 1.5% on Wednesday. The Nifty Midcap 150 and Smallcap 250 index plummeted 4.17% and 5.18%, respectively, on Wednesday.
Technical indicators indicate further consolidation in the market as benchmark Nifty broke down from a flag and pennant pattern, which indicates consolidation. All expiries had high open interest buildup on 22,500 levels on the call side and 22,000 levels on the put side, said analysts.
"Unless and until there is unwinding of open interest on call and put side, Nifty is expected to stay at this level and witness range bound movement," said Dharan Shah, Founder, Tradonomy Research Company. "Multiple Relative Strength Indicator (RSI) divergences were also observed, where Nifty made new highs while RSI made lower levels indicating weakness in the market."
Nifty Midcap 150 index declined 0.32% while the Smallcap 250 index closed slightly higher at 0.21%.
Mahindra & Mahindra emerged as the top loser on both the indices and and were top losers in Nifty, falling 4.9%, 4.15% and 2.85%, respectively.
Raina said that the range bound movement of the index is expected to continue in the near term.
"The sentiment is cautious due to the expensive valuations which is leading to consolidation in Nifty," said Raina. "The 150-200 points range bound movement is likely to continue till the markets find a base."
Analysts said that the pre-election rally took place slightly earlier this time in December, with the markets rallying around 12% like the historical pre-election rallies at 7-10%.
"The markets have not filled the run-away gap at 20,200 levels from the December rally and run-away-gaps are generally retraced and covered post the big move," said Shah. "This indicates 8% correction from current levels."
FPIs bought shares worth ₹848.56 crore on Friday, while their domestic counterparts were sellers to the tune of ₹-682.26 crore.
Source: Stocks-Markets-Economic Times
