Mid and small-cap segments remained relatively resilient, supported by better than expected Q4 earnings and moderation in premium valuation

FPJ News Service mumbai

Markets on Tuesday witnessed volatility, and snapped the two-day rally as investors opted for profit booking, driven by valuation concerns and weakness across Asian markets. Banking, IT and auto counters witnessed profit-taking. The 30-share BSE Sensex lost 624.82 points to settle at 81,551.63. During the day, it fell 1,054.75 points (1.28%) to 81,121.70. The 50-issue NSE Nifty lost 174.95 points to 24,826.20.

FIIs bought equities worth Rs 348.45 crore, while DIIs bought equities worth Rs 10,104.66 crore. Though FIIs are cautious, domestic investors, in general, are upbeat about India’s industrial and manufacturing output data (April) to be released today, and the first quarter GDP numbers on Friday.

“The domestic market witnessed volatility and snapped a two-day rally, as investors opted for profit- booking driven by valuation concerns and weakness across Asian markets. The benchmark index once again failed to decisively breach the 25k resistance level, reflecting the absence of positive triggers. Large-cap stocks underperformed, weighed down by subdued FII participation and lacklustre earnings from blue-chip companies. Conversely, mid- and small-cap segments remained relatively resilient, supported by better than estimated Q4 earnings and moderation in premium valuation,” pointed out Vinod Nair, Head of Research, Geojit Investments.

“Since mutual funds are sitting on sizable cash, any dip will be bought into, and high valuations will trigger selling on rallies. A sustained rally will happen only when leading indicators signal revival in earnings growth. An important trend in the market now is the slow accumulation in rate sensitives like autos in anticipation of more rate cuts which are almost sure to happen since inflation is trending down,” said Dr VK Vijayakumar, chief investment strategist at Geojit Investments. 

Overall market data shows gains in healthcare, industrials, telecommunication, capital goods, realty and consumer durables. IndusInd Bank, Sun Pharma, Adani Ports, Nestle and Asian Paints were the top gainers. UltraTech Cement and ITC lost 2.21%, and 2%, respectively. Tata Motors, NTPC, Axis Bank, HCL Tech, Mahindra & Mahindra, HDFC Bank, ICICI Bank and Eternal were among the losers.

“A significant feature of the SIP flows during this phase of the market is that investors are staying invested for longer time periods than in the past. This will provide support to the market,” Dr VKV added.  "We are currently witnessing a tug-of-war between bulls and bears amid mixed global cues. However, favourable domestic factors such as a good monsoon and strong macroeconomic data are helping maintain a positive undertone," Ajit Mishra - SVP, Research, Religare Broking Ltd said.