The outperformance of India during September so far is stunning but the market exuberance has pushed valuations to very high levels. India’s valuation premium to EM peers is above 80 per cent now. This is difficult to sustain, said an analyst.
“Investors may think of reducing portfolio risk by moving to the safety of high quality largecaps. Partial profit booking in the mid- and small-cap segment and moving some money to fixed income also may be considered,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are bluechips doing
After opening in the green, benchmark indices jumped further higher. At 9.22 am, BSE flagship Sensex was up 366 points, or 0.61 per cent, to 60,251. NSE benchmark Nifty gained 109 points or 0.61 per cent to 17,931.
“Nifty is in a very strong bullish trend. We may face some resistance at 18,000 in Nifty50, while 17,650 may act as an immediate support,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, Infosys was the biggest gainer, up 2.38 per cent. Wipro, HCL Tech, HDFC Bank, Tech Mahindra, IndusInd Bank, TCS and Asian Paints were among other gainers.
JSW Steel was the top loser in the pack, down 1.31 per cent. Hindalco Industries, Tata Steel, HUL, Tata Consumer, Titan, Shree Cement and NTPC were among those that traded in the red.
FACTORS DRIVING MARKETS
Good news
Positivity in Fed announcement?: Some analysts say that the Fed announcement appeared to reassure investors that interest rate hikes remain sometime away even if the tapering of its massive asset purchase programme is set to start this year.
Dollar falls: A risk-on sentiment weighed on the dollar, which dropped sharply overnight against a basket of its peers, falling from near a one-month high to a week-low.
Bad news
Unemployment up: The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but the underlying trend remained consistent with a steadily recovering labour market.
Evergrande crisis: Investors continue to worry about the fate of property developer China Evergrande which faces an interest payment deadline due Thursday. Its shares fell 5.2 per cent on Friday after bouncing 17.6 per cent a day earlier.
Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.84 per cent while Nifty Midcap advanced 0.66 per cent. Broadest index on NSE, Nifty 500, was up 0.60 per cent.
Balrampur Chini Mills, Dilip Buildcon, Vakrangee, Aditya Birla Capital, Mphasis and Oberoi Realty were gainers from the space while Zee Entertainment, Crompton Greaves, Sun TV, PVR, KEC International and Welspun India were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.1 per cent and was set for a weekly loss of 0.68 per cent. Australian shares fell 0.41 per cent while the Hong Kong benchmark was mostly flat.
Japan’s Nikkei rose 1.93 per cent, however, catching up on global gains after a public holiday. Chinese bluechips reversed early losses to gain 0.6 per cent after a cash injection from the central bank brought its weekly injection to 270 billion yuan ($42 billion) – the largest since January.
US stock futures, the S&P 500 e-minis, were up 0.5 per cent.
