NEW DELHI: Domestic equity market has come under a bear grip as benchmark indices settled
lower for the second straight session over inflated valuation concerns and absence of fresh triggers.
On Wednesday, the BSE Sensex fell 536 points or 0.7% to settle at 71,356, broader Nifty 50 slipped 148 points or 0.7% to close at 21,517. The two indices had fallen by about half a percentage point on Tuesday.
“Lack of fresh triggers and concerns over valuation influenced investors to stay sidelined. Weak global indicators like contraction in China & Eurozone manufacturing data, added concerns about global economic recovery in 2024,” said Vinod Nair, head of research at Geojit Financial Services. The market was waiting for the Fed minutes to come on late Wednesday for interest rate insights. Investors are taking a cautious approach ahead of Q3FY24 earning session.
Most analysts have termed the recent sell-off as a ‘healthy correction’ after the benchmarks gave a high return of 20% in 2023 and the broader indices, midcap and small-caps, surged about 50% on average last yearAs per brokerage firm Motilal Oswal, the 12-month trailing P/E for Nifty, at 22.9 times, is above its LPA (long period average) of 22.2 times (3% premium). At 3.6 times, the 12-month trailing P/B ratio for Nifty is above its historical average of 3 times (19% premium).
Sheersham Gupta, director and senior technical analyst at Rupeezy, said “Following the global markets, it was another day of correction for Indian markets. It is a healthy correction for an overheated market as Nifty was at unusually high levels above the 50-day moving average. Markets are taking some time to cool down as is evident from fall in India VIX.”
Osho Krishan, Sr. analyst - technical & derivative research, at AngelOne, said global developments may dictate near-term trend. Simultaneously, we are in the midst of price-wise correction, with many stock adjustments after the recent rally, and hence, it is advisable to have a pragmatic view with a one-step approach, following the mentioned levels, added Krishan.