Market Wrap: Sensex, Nifty end in the red on profit booking; IT stocks buck the trend
Reliance Industries, Power Grid, SBI and ICICI Bank amid mixed global cues. Investors booked some profit in the absence of any fresh trigger. The domestic market is trading at a premium valuation.
As the June quarter numbers have not been better than expected so far, stretched valuation is likely to trigger a correction in the market. "The current rally is stretching valuations beyond comfort levels. Sensex is now trading at 25 times trailing one-year earnings.
It is important to note that the rally is driven by PE expansion, not commensurate earnings growth. The Q1FY24 earnings growth is muted except in banking and refineries. Results indicate that rural demand is yet to pick up in a meaningful manner," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, observed.
"Even though the Indian economy is in a sweet spot and it makes sense to remain invested, investors should be cautious in their fresh investment, particularly in chasing low-grade small-caps," said Vijayakumar. After opening 5 points higher at 66,532.98 against the previous close of 66,527.67, the Sensex remained volatile throughout the session, swinging 270 points. The index finally closed 68 points, or 0.10 per cent, lower at 66,459.31 while Nifty closed the day with a loss of 20 points, or 0.10 per cent, at 19,733.55.
The BSE Midcpa index underperformed the benchmark Sensex, falling 0.23 per cent. The index hit its record high of 30,497 in intraday trade but failed to sustain the gains. The BSE Smallcap index, on the other hand, ended with a gain of 0.50 per cent at 35,177.85 after hitting its record high of 35,257.68 during the session.
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