Sensex down almost 2% in two days; is it time to change investment strategy?
Nifty has come off by 1.5 per cent. Sensex and Nifty hit their fresh record highs of 67,619.17 and 19,991.85, respectively, on Thursday (July 20). On Monday (July 24), Sensex closed 299 points, or 0.45 per cent, lower at 66,384.78 while the Nifty closed at 19,672.35, down 73 points, or 0.37 per cent.
The domestic market is witnessing profit booking at higher levels because of concerns over valuation. Moreover, most positives are already on the table so the market is finding it difficult to maintain altitude. "Investors should keep in mind the fact that at the current Nifty PE (price-to-earnings ratio) of above 20 based on FY 24 estimated earnings, so there is no valuation comfort in the market.
Barring the US, India is the most expensive market in the world now. At high valuations, some negative triggers can lead to a sharp correction. But in the near term the party may continue," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The market is also slightly cautious ahead of major central bank meetings, including the Federal Reserve, European Central Bank and Bank of Japan meeting this week. The market probably has discounted a 25 bps hike by the Fed on Wednesday (July 26) but the key thing to focus on is how the Fed assesses current trends in inflation and how it sees the future rate hike trajectory. Read more: Sensex, Nifty fall for the second straight day; RIL, ITC among top drags; mid, smallcaps outperform Experts do not see the ongoing correction as a major concern and don't suggest trimming exposure to equities.
In fact, they believe this is an opportunity to buy quality stocks. Some of them still find valuations at reasonable levels. Rakesh Parekh, MD, Portfolio Management Services at
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