The Indian stock market following weak global cues has registered a percent drop for the second consecutive day amid rising concerns of Delta variant leading to fresh lockdowns and economic recovery.
Sensex is down 461.74 points or 0.88% at 52091.66, and the Nifty shed 151.60 points or 0.96% at 15600.80.
Experts point out that investors appear worried about the rich valuations of the market and any negative news is triggering profit-booking in the market.
“The 725 points cut in the Dow yesterday, the worst in 2021, is a reflection of the risk-off in markets globally. The fact is that at high valuations when investors are sitting on big profits, any fear can trigger profit booking and corrections,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“This correction is good for the markets. In the absence of corrections, the excessive valuations will render the inevitable crash very severe and painful. A major correction is unlikely in India since we have already corrected a bit from the recent record high.”
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The fall in the market was largely led by underperformance from the metal space which is down over 2 percent. Metal and mining stocks have seen sharp gains in the first half of the calendar year 2021, supported by augmented demand globally amid constrained supply in the wake of the COVID-19 pandemic.
Metal stocks witness broad-based selling as investors booked profits after Shanghai copper prices hit a near one-month low amid surge in coronavirus cases around the world which threatened the outlook of a global economic recovery, according to media reports.
The top losers from the metal space included NALCO which is down over 4 percent followed by SAIL, Tata Steel, JSW Steel, Jindal Steel & Power and Hindalco Industries among others.
Banks and financials also pulled the market lower as market heavyweight HDFC Bank shed 2 percent falling 5 percent since yesterday after the company declared its Q1 results. IndusInd Bank, RBL Bank, State Bank of India, IDFC First Bank, ICICI Bank and AU Small Finance Bank are the other losers.
Nifty Financial Services is down over a percent dragged by Cholamandalam Investment which shed 3 percent followed by HDFC AMC, SBI Life Insurance and ICICI Prudential Life Insurance among others.
Auto stocks are also under pressure as top names including Mahindra & Mahindra along with Ashok Leyland, TVS Motor, Hero MotoCorp and Eicher Motors pulled the index lower.
Real estate stock after outperforming for three consecutive days of gains shed over 2 percent, underperforming Nifty and Sensex as investors embarked on profit booking amid concerns of rising COVID cases gobally and sluggish economic growth.
The top losers included Indiabulls Real Estate, Oberoi Realty, Sobha and Godrej Properties which are down 3 percent each followed by DLF, Mahindra Lifespace and Prestige Estates.
V K Vijayakumar of Geojit Financial Services feels that this correction is good for the markets. In the absence of corrections, the excessive valuations will render the inevitable crash very severe and painful. A major correction is unlikely in India since we have already corrected a bit from the recent record high.
“Investors may opt for the safety of performing sectors with earnings visibility like IT, pharma, metals, cement, capital goods, and large financials,” he added.
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