After a record run, Indian stock markets seem have come under the weather with the benchmark Sensex shedding over 700 points and Nifty over 200 points this month so far.
The Sensex plunged 777.33 points, or 2.39%, while the broader Nifty slumped 206.60 points, or 2.04%, in the last seven trading sessions.
The fall has been on account of plethora of reasons – muted June quarter earnings, mixed performance by smallcaps and midcaps, a crackdown by the Securities and Exchange Board of India (Sebi) against suspected shell companies, to tension between the US and North Korea, market participants said.
So far in the month, banking stocks fella slump of 3.04%, IT has fallen 2.10%, healthcare tumbled 7.22% and metal has moved down 2.97%. Additionally, PSU and auto dropped 0.46% and 2.11%, respectively.
The current fall, however, comes as no surprise to experts, who say the market was long due for a correction and had predicted that the euphoria created around indices scaling new highs would soon fade out given the unjustified surge in valuations. They see the fall continuing.
On Wednesday, the Sensex tanked 216 points, or 0.68% retreating to the 31000 mark closing at 31797.84 in Wednesday's trade while the NSE Nifty tumbled 70.50 points, or 0.71%, ending at 9908.05.
Sun Pharma lost the most 5.13% to hit an over four-year low after its US subsidiary Taro Pharmaceutical reported weak quarterly numbers. Adani Ports tanked 4.12%, Tata Motors fell 3.17%, Cipla slipped 2.83% while Bajaj Auto dropped 2.79%.
Dr Reddy's, Axis Bank, Lupin, Maruti, ICICI Bank, Tata Steel, HDFC Bank, Coal India and Mahindra and Mahindra were the other laggards.
"Global headwinds owing to geopolitical tension between North Korea and the US provided more cues to the domestic market. Smallcap and midcap indices underperformed," said Vinod Nair, head of research, Geojit Financial Services.
According to Sanjeev Zarbade, vice president-PCG Research, Kotak Securities, the medium to long term potential of Indian equities seems promising due to strong fundamentals of Indian economy. Investors should strictly invest only in companies with good corporate governance and strong balance sheets, he said.
Sebi on Monday had clamped down on 331 companies directing exchanges to take action against them, unnerving investors who fear such regulatory action in future as well which could slow down the momentum.
Lukewarm earnings results posted by some companies for the June quarter augmented the ongoing selling pressure. The BSE Midcap and BSE Smallcap indices slipped nearly 2%. Pharma sector witnessed selling on pricing pressure in the US market. While the metals and IT indices on National Stock Exchange traded near the flat line, healthcare, auto and media indices lagged more than 1%.
Overseas Asian stocks ended lower and European shares dropped in early hours. Broader markets too witnessed selling pressure with small-cap index sliding 1.88% and mid-cap slipping 1.66%. Key indices in Japan, Hong Kong, Singapore, China and Taiwan moved down up to 1.29%.
LOOMING CORRECTION
- Experts say the market was long due for a correction, see the fall continuing
- This was due to muted earnings, Sebi crackdown and geopolitical tensions
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On Wednesday, the Sensex tanked 216 points, or 0.68% retreating to the 31000 mark closing at 31797.84 in Wednesday's trade while the NSE Nifty tumbled 70.50 points, or 0.71%, ending at 9908.05.
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