New Delhi [India] : Indian stock took a breather on Wednesday after having gone through a consistent bull run in the previous few sessions.
Benchmark indices Sensex and Nifty were 0.1 per cent lower each this morning, attributable to profit booking by investors. Last week, the indices accumulated around 3 per cent gains each, their highest in months, and hit their fresh all-time highs. Notably, Sensex crossed the 65,000 mark for the first time this week. The consistent inflow of foreign funds, firm economic outlook, and moderation in inflation supported Indian stocks recently.
Foreign portfolio investors (FPIs) have remained net buyers in Indian stock markets for the fourth straight month, according to data from the National Securities Depository (NSDL). FPIs bought Indian stocks worth Rs 7,936 crore, Rs 11,631 crore, Rs 43,838 crore, and Rs 47,148 crore in March, April, May, and June, respectively, data showed. "The 15 per cent surge in Nifty from the low levels of March has given a bullish flavour to this rally, but it is difficult to describe this as a bull market since valuations do not permit a sustained rally and the evolving economic fundamentals do not warrant continuation of the rally much beyond the current levels," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. "Valuations are not favourable now and growth and earnings prospects, though good, are not very bright. For instance, the June auto sales numbers came below expectations and indicate that sluggish demand remains a problem, particularly for price-sensitive mass consumption products."
According to Ajit Mishra, SVP - Technical Research, Religare Broking Ltd, "The rotational buying across sectors is helping the index to maintain a positive tone despite the overbought condition. And, we feel the scenario would continue, citing the prevailing structure and favourable global cues. Having said that, traders should not get carried away with prevailing buoyancy and stick only with the quality stocks and avoid penny stocks or laggards, in anticipation of a recovery."
