The minor pullback yesterday was caused by the RBI’s observations on excessive stock valuations. But the RBI had made similar observations a few months ago and the market ignored that. A sharp market correction is likely to happen when the FIIs turn into big sellers but there are no signs of that yet, said an analyst.
“Financials like leading banks, leading mortgage companies, health care, IT and construction-related stocks like paints and cement are segments with high earnings visibility and, therefore, justifiable valuations. On the contrary, some of the newly listed digital consumer stocks are trading at irrational valuations and, therefore, are vulnerable to corrections. Investors should distinguish between these two polarised valuation segments,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are bluechips doing
After opening in the red, benchmark indices pared some losses. At 9.32 am, BSE flagship Sensex was down 168 points or 0.28 per cent to 60,154. NSE benchmark Nifty declined 48 points or 0.27 per cent to 17,951.
“On the technical front, the key resistance levels for Nifty50 are 18,100 followed by 18,200 and on the downside 17,850 followed by 17,800 can act as strong support,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, NTPC was the biggest gainer, up 2.57 per cent. Tata Motors, Asian Paints, M&M, SBI Life Insurance, Tata Consumer, Power Grid and Maruti Suzuki were among other gainers.
HDFC was the top loser in the pack, down 1.33 per cent. Reliance Industries, UPL, Adani Ports, Dr Reddy’s Labs, Cipla, HDFC Bank, Axis Bank and Grasim Industries were among those that traded in the red.
Factors driving markets
Retail sales jump in US: US retail sales jumped in October, topping expectations, in an indication that high inflation was not yet dampening spending, even as worries about the rising cost of living sent consumer sentiment tumbling to a 10-year low in early November.
Greenback surges: The dollar reached a high of 114.97 yen in early Asian hours, its strongest since March 2017, while the euro languished at a 16-month low at $1.1320. A higher dollar means greater possibility of outflow from equities.
Broader markets
Broader market indices were trading mixed, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.34 per cent while Nifty Midcap declined 0.17 per cent. The broadest index on NSE, Nifty 500 was down 0.08 per cent.
Bharat Forge, Tata Power, Endurance Technologies, Tanla Platforms, Avanti Feeds and Trident were gainers from the space while Chambal Fertilisers, Balaji Amines, Mazagon Dock, Godrej Properties, Ipca Labs and Zee Entertainment were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.45 per cent edging off Tuesday’s near three-week closing high, with declines in most markets, while Japan’s Nikkei lost 0.4 per cent.
On Wednesday, the Hong Kong benchmark slipped 0.4 per cent, weighed by property developers and casinos as traders bet a recent rebound in both sectors had gone too far. Chinese blue chips were flat. Australian shares slipped 0.5 per cent, weighed by Commonwealth Bank of Australia, the country’s largest bank, whose shares slipped 6 per cent.
