Taking Stock | Profit-booking drags Sensex down from Mt 50k; mid, smallcaps underperform
Indian equity benchmarks the Sensex and the Nifty ended with losses on January 21, erasing all gains of the morning trade due to losses in select heavyweights such as HDFC twins, Bharti Airtel and TCS.
After opening in the green, Sensex hit an all-time high of 50,184.01, while the Nifty scaled a fresh peak of 14,753.55 in the intraday trade. However, both failed to hold the gains and succumbed to profit-booking at the fag end of the session.
At close, the Sensex was down 167 points, or 0.34 percent, at 49,624.76 and the Nifty was at 14,590.35, down 54 points or 0.37 percent.
Mid and small-caps underperformed their large peers. BSE midcap and smallcap indices fell 0.88 percent and 0.68 percent, respectively.
Market breadth remained in the favour of declines, with the advance-decline ratio at 2:5.Close
Despite the fall, market experts say the underlying sentiment is positive and investors should bet on quality stocks.
"The market is expected to maintain its momentum and remain expensive, given ample liquidity and high earnings growth. Going ahead, the domestic market will keep track of high budget expectations and global market, which will focus on the policies to be adopted by the new president of the US," said Vinod Nair, Head of Research at Geojit Financial Services.
Economic recovery, hopes around Joe Biden's stimulus package, the Union Budget, foreign inflows and the December quarter earnings are the factors that will influence the mod of the market in the days to come.
Amar Ambani, Senior President & Institutional Research Head, YES SECURITIES, said the Sensex can hit 1,00,000-mark by 2025.
"I expect the Sensex to surpass 1,00,000 figure by 2025. A fresh upcycle has resumed for small and mid-caps as well after a long consolidation in 2018, 2019 and a large part of 2020," he said.
The Sensex hit 50,000 on the strength of the faster-than-anticipated recovery in economic activity, FPI flows into and high hopes from the budget, promised to be "like never before" by the finance minister Nirmala Sitharaman.
"We've entered a super-cycle for Indian equities as we had seen in the year 2003. We see a high possibility of decisive reforms from the government, accelerated earnings growth and a continued liquidity flow chasing growth, in a period of weakening US dollar," Ambani said.
Sectors and stocks
Among the sectoral indices, BSE telecom (down 2.64 percent), realty (down 2.56 percent) and metal (down 2.41 percent) ended as the top laggards.
As many as 281 stocks, including Bajaj Auto, Larsen & Toubro, Adani Enterprises, Adani Ports and Adani Transmission, hit their 52-week highs on BSE.
Over 300 stocks, including Future Supply Chain Solutions, Majesco, Future Lifestyle Fashions and Future Consumer, hit their upper circuits on BSE.
Havells, Apollo Tyre and Tata Motors were among the stocks that witnessed long buildup, while L&T Finance Holdings, BHEL and Bandhan Bank were among those that saw a short buildup.
A volume spike of over 1,000 percent was seen in BHEL. Grasim, Voltas and Havells were among the stocks that witnessed a volume spike of more than 600 percent.
The market may witness some consolidation in the coming session and volatility may be high ahead of the Budget, analysts said.
Chandan Taparia, Vice President and Analyst-Derivatives at Motilal Oswal Financial Services, said the Nifty formed an outside bar on a daily scale, indicating a volatile swing in the market that could continue ahead of the budget.
"Now, the index has to continue to hold above 14,500 zones to extend its move towards 14,750 then 15,000 zones, while on the downside, immediate support exists at 14,450 and 14,350 levels," he said.
Rahul Sharma, Head-Technical & Derivatives Research, JM Financial Services, said the Sensex hitting 50,000 is more of a mental milestone but an important one.
"Since booking the profit is better than looking the profit, we advise to take some profits around Nifty 14,800/15,000 levels and keep portfolios hedged with Nifty Put Options of February Expiry," he said.
"As a budget Strategy for traders, it is best to buy the expectation and sell the realisation. Maintain a trailing stop loss of 14,440 for positional longs in the Nifty," Sharma said.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.