NEW DELHI: The bears made a strong comeback on Dalal Street on Thursday and dragged India’s equity market benchmark indices - Sensex and Nifty50- by nearly 2%, their biggest single-day fall in six months.
The Nifty50 closed 1.9% lower at 17,857.25 as it broke below its 20-day moving average of around 18,000 points while the Sensex lost 1,158 points to close the day at 59,984.7. This was its biggest drop since April 12 this year, when the 30-share index had plunged 1,708 points.
The fresh bloodbath wiped out investors’ wealth by Rs 4.82 lakh crore in a single day, with the market capitalisation of all BSE-listed firms falling to Rs 260.48 lakh crore.
“Relentless selling by FIIs (foreign institutional investors) is a key reason for this correction in the market. Today, Morgan Stanley downgraded India to equal-weight due to outperformance by Indian markets in recent months. Inflation and slowdown in global growth momentum are other concerns amid expensive valuations,” said Santosh Meena, Head of Research, Swastika Investmart.
Binod Modi, Head - Strategy at Reliance Securities, said that in their view, in addition to weak global cues, unwinding of long positions especially in financials on F&O expiry, which had seen sharp rally in recent period were the prime reasons for the correction.
Morgan Stanley on Thursday downgraded domestic equities from ‘overweight’ (OW) to ‘equalweight’ (EW) and recommended taking some money off the table.
“We move tactically EW on India equities after strong relative gains. We expect a structural multi-year earnings recovery, but at 24 times forward (P/E) we look for some consolidation ahead of Fed tapering, an RBI hike in February and higher energy costs,” Morgan Stanley said in a note on Asia Pacific markets.
In recent times, HSBC, UBS, Nomura and Jefferies have increased weightage to China and other Asian markets, while raising concerns over India’s expensive valuations.
Benchmark indices in India have risen more than 25% this year on account of easy money and increased retail participation, raising concerns of overvaluations.
Ajit Mishra, VP - Research, Religare Broking, said that this fall in the index has derailed the recent recovery and “we may see a further slide in the following sessions”.
Top losers in Sensex pack on Thursday
ITC: 225.20 (5.54%).
ICICI: 798.65 (4.39%).
Kotak Mahindra: 2098 (4.05%).
Axis Bank: 757.80 (3.75%).
Titan: 2369.57 (3.68%).
