Discomfiture with premium value prompts profit booking

Hyderabad: As traders and speculators resorted to aggressive profit booking in index heavyweights RIL, L&T, HDFC Bank, and Airtel, among others, benchmark indexes, the BSE Sensex and NSE Nifty, quickly reversed course on Friday, plunging more than 1.3% and breaking through the three support levels. The wider Nifty-50 tool fell by 289 points, reaching the day’s low of 22,358.65 points, while the BSE Sensex plummeted by 1,627.85 points, or 1.6%, from the intra-day high of 75,095.18 points to the session’s low of 73,627.99. The trading of all sectoral indexes was downward.

The 30-share BSE Sensex began the day at 484.07 points but ultimately fell 732.96 points, or 0.98 percent, to close at 73,878.15. The NSE Nifty dropped to 22,475.85 points, a loss of 172.35 points, or 0.76 percent. In the early session, the benchmark increased by 146.5 points, or 0.64 percent, to a record of 22,794.70. Companies listed on the BSE had a decline in market capitalization (mcap) of Rs 2,25,543.41 crore to Rs 4,06,24,224.49 crore (Rs 406.24 lakh crore, or $4.89 trillion). A massive Rs4.25 lakh crore was lost on the BSE during the intraday session as the Sensex plummeted 1,627.45 points, reaching a low of 73,467.73 for the day.

Analysts believe that the recent record highs, which saw Sensex and Nifty rise by more than 4.5 percent from their recent lows in the previous two weeks, are mostly to blame for the bloodbath on the exchanges. In addition, most Asian indexes were trading down.

“The market was under pressure to sell due to profit-booking and a degree of caution before the publication of the US non-farm payroll data. On the other hand, a drop in oil prices and the lack of any negative surprises in Q4 profits so far should help limit the damage. According to Vinod Nair, Head of Research at Geojit Financial Services, “despite the fact that the correction was widespread, the large-cap stock was the main underperformer because of the moderation of FII’s exposure to the domestic market.”

Analysts speculate that the domestic markets may be losing momentum after reaching all-time highs in the previous six months due to expectations of a third term for the BJP. In the first hour of trading, the Sensex was trading higher, closing close on its all-time high of 75,124 points at 75,046 points. In contrast, the NSE Nifty had a sharp decline of 340 points in intraday trading, culminating in a new all-time high of 22,795 points.