Sustained FII selling and high valuations are the major reasons for the weakness in the market now. It is normal and rational for FIIs to sell and book profits at the present elevated valuations. HNIs also might be tempted to partially book profits.
“Even in the event of a sharp correction in the market, these bluechips will decline only less proportionately and will bounce back smartly in the next leg of the rally. So, there is safety in largecaps and high risk in many smallcaps, which are being pushed up by newbie retail investors. A lesson from history is that fundamentally unsound smallcaps, the so-called ‘cats & dogs’, run up too much before a big correction,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are the bluechips doing?
After opening in the green, benchmark indices traded flat. At 9.30 am, BSE flagship Sensex was down 16 points or 0.03 per cent to 52,303. NSE benchmark Nifty was down 3 points or 0.02 per cent to 15,677.
In the 50-share pack Nifty, Adani Ports was the biggest gainer, up 1.91 per cent. ONGC, IndianOil, Coal India, M&M, Divi’s Labs, ICICI Bank, Titan and Reliance Industries were among other gainers.
TCS was the top loser in the pack, down 0.99 per cent. Britannia, JSW Steel,
, , HDFC Bank, Tata Motors, HDFC Life Insurance and HCL Tech were other losers in the pack.
FACTORS DRIVING MARKETS
Good news
Unemployment falls: Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell more than expected last week, while layoffs plunged to a 21-year low in June.
Bad News
Dollar remains elevated: The dollar held firm near a three-month high scaled in the previous sessions. A stronger dollar makes Indian investors nervous as higher the greenback, more outflow from emerging markets.
Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.63 per cent, while Nifty Midcap advanced 0.11 per cent. Broadest index on NSE, Nifty500 was unchanged.
Dixon, Navin Fluorine, Indiamart Intermesh, IOL Chemicals, Affle India and Happiest Minds were gainers from the space while Lux Industries, KEI Industries, Birlasoft, Adani Total Gas, JSW Energy and Voda Idea were under selling pressure.
Global markets
Australian shares rose half a percent, lifted by energy stocks, but were on track to post a second straight week of losses as the country combats outbreaks of the Delta coronavirus variant.
The S&P/ASX 200 index rose 0.4 per cent to 7,293.2 points by 0109 GMT. Elsewhere, Japan’s Nikkei gained 0.3 per cent and S&P 500 E-minis futures were up 0.1 per cent.
