Equities across the board fell on Monday, amid profit taking. The fall was more deep in mid- and small-cap stocks, while public sector undertakings wilted under valuation concerns, said analysts. Besides, margin call also triggered selling, they added.
The NSE Nifty 50 index was down 0.76 per cent at 21,616.05, while the S&P BSE Sensex settled 0.73 per cent lower at 71,072.49. The broader BSE small-cap index and mid-caps declined 3.1.6 per cent and 2.62 per cent, respectively, extending their underperformance over the Nifty50 for the second consecutive session.
An uptick in exchange margin requirements caused a decrease in positions, primarily in mid- and small-caps, said Vinod Nair, Head of Research, Geojit Financial Services. ”Aside from the pharma and IT sectors, selling was widespread, with notable struggles seen in PSU banks. The premium valuation gap between mid- to large-caps has notched to its all-time high. Despite a robust economic forecast, corporate earnings are expected to slow due to moderated operating margins. It is going to be a challenge for the broad market to sustain the premium valuation. Large-caps are predicted to excel amid consolidation,” he added.
The BSE CPSE (measuring the performance of Central Public Sector Enterprises) and the BSE PSU, consisting of public sector undertakings, tumbled the most at 4.92 per cent and 4.44 per cent, respectively. Among the sectoral indices, BSE Utilities was the biggest loser by 3.60 per cent, followed by BSE Telecommunication at 3.44 per cent. Except for BSE TECk, all the other sectoral indices closed in the red.
Among the PSUs, SJVN crashed 20 per cent, followed by NHPC (15.81 per cent), New India Assurance (15.11 per cent), NLC India (15.11 per cent) and GIC (14.41 per cent)
The advance decline ratio was heavily skewed in favour of decliners with as many as 3,015 stocks ending in the red against 980 stocks that closed in the green. The volatility index — India VIX jumped 4 per cent to 16 levels.
Abhishek Banerjee, smallcase Manager, Founder-Lotusdew Wealth and Investment Advisors, said, “Markets at all-time high makes everyone nervous. Everyone is looking for any negative news to book profits. That said, we are barely few percentage points away from all-time high while there are two conflicts, tighter than expected monetary policy, financials lagging the markets and we are here inspite of all of this.”
DII, FPI on buy mode
Interestingly, both foreign portfolio investors and domestic investors were buyers, according provisional data provided by the exchanges. While FPIs were buyers to the tune of ₹126.60 crore, domestic institutions lapped up ₹1,711.75 crore worth shares.
The Long-Short ratio, remained flat since last three trading sessions, hovering in the 63 per cent range, as the FPIs activity remain subdued in Index futures, said Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities. “Strong put writing (bulls’ entry) supported by call writers exiting (bears exit) was observed at 21,800 & 21,900 Strike in Nifty. Strong put writing coupled with call writers exiting at a particular strike price, is usually considered as a sign of resistance getting weaker and stronger possibility of prices moving higher,” he added.