Bears tighten grip on D-Street: Nifty 50, Sensex log worst session in 2 months; small, midcaps' worst in 2 years
US inflation data has raised concerns that Jerome Powell-led US Federal Reserve may postpone cutting interest rates in June over achieving its inflation target of two per cent. This also led foreign investors dumping Indian shares today with the total outflow by foreign institutional investors (FIIs) coming in at ₹4,595 crore, according to NSE data. Domestic institutional investors (DIIs) instead bought ₹9,094 crore in Indian equities, but that could not stabilise the larger selling pressure today witnessed across counters.
The Nifty 50 declined 1.51 per cent to 21,997.70, closing below the 22,000 mark for the first time this month. The 30-share BSE Sensex settled 1.23 per cent lower at 72,761.89 by the end of the session. Broader markets took the worst hit as small- and mid-caps plunged even steeper by 5.28 per cent and 4.40 per cent respectively, extending their losses over long valuations.
Experts have also flagged concerns over markets being in a bubble zone. This came after capital markets regulator Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch earlier this week raised concerns over stretched valuations of small- and mid-cap stocks, which are generally favoured by retail investors through monthly purchases to mutual funds built around such investment themes. “There are pockets of froth in the market.
Some people call it a bubble, some may call it froth. It may not be appropriate to allow that froth to keep building,'' said Buch, according to reports. Worried about large inflows into small- and mid-cap funds, SEBI has asked mutual funds to conduct stress tests on mutual funds and disclose results by Friday.
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