Sensex, Nifty choppy in early trade; PSU banks rally
A sharp market correction is likely to happen when the FIIs turn big sellers. But there are no signs of that yet.
Domestic benchmark equity indices opened on a choppy note on Wednesday as Asian peers were dull after Japan’s exports growth hit an eight-month low. At 10:30am, Sensex advanced 42.99 points or 0.07% to 60,365.36, while Nifty stood at 18,001.05, up 1.85 points or 0.01%.
“When valuations are rich, as they are now, some triggers can cause market pullback. The minor pullback yesterday was caused by the RBI’s observations on excessive stock valuations. But the RBI had made similar observations a few months ago and the market ignored that. A sharp market correction is likely to happen when the FIIs turn big sellers. But there are no signs of that yet,” said VK Vijayakumar, Cheif Investment Strategist at Geojit Financial Services.
Even while markets are generally richly valued, there are segments of fair valuations and segments of bubble valuations. Investors should stick to the former and avoid the latter. Financials like leading banks, leading mortgage companies, health care, IT and construction related stocks like paints and cement are segments with high earnings visibility and, therefore, justifiable valuations. On the contrary, some of the newly listed digital consumer stocks are trading at irrational valuations and, therefore, are vulnerable to corrections. Investors should distinguish between these two polarised valuation segments, added Vijayakumar.
Gainers & losers
Top gainers & losers on the Sensex.
Sectoral strand
Most sectoral indices on the NSE were in the green. Nifty PSU Bank, rallying 1.5%, was the top sectoral gainer followed by Nifty Auto, Nifty Media and Nifty FMCG. On the other hand, Nifty IT and Nifty Pharma were in the red.
Broader markets
The broader markets outperformed the benchmark indices as the BSE MidCap index rose 74 points or 0.28% to 26,491 and the BSE SmallCap index was trading at 29,357 advancing 129 points or 0.44%.
Bulls were in charge of the markets as 1,504 shares advanced compared to 943 declining and 108 remained unchanged.
Global markets
Overseas, Asian stocks are mostly trading lower on Wednesday, as Japan’s exports growth hit an eight-month low. Japan’s exports snapped seven months of double-digit growth in October due to slowing car shipments, as global supply constraints hit the country’s major manufacturers. Exports rose 9.4% year-on-year in October, Ministry of Finance data showed on Wednesday. It followed 13.0% growth in the prior month and was the weakest expansion since a decline in February. Car shipments fell 36.7%.
New Zealand’s Prime Minister announced that the country’s largest city Auckland will reopen its domestic borders from December 15 for fully vaccinated people and those with negative Covid test results, as per reports.
U.S. stocks gained on Tuesday after a strong October retail sales report and better-than-expected third-quarter results from Home Depot and Walmart signaled the U.S. consumer is still ramping up spending even in the face of rising prices.
The latest retail sales figures for October showed consumers were increasing their spending, with sales jumping 1.7%. That compares to a 0.8% increase in the prior month. The report showed broad strength in a number of categories from autos to sporting goods. Online sales were up 10.2% from a year ago. The gains came even as consumer prices surged 6.2% year-over-year last month, inflation not seen since the 1990s.
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