Profit booking continues in Indian stocks

New Delhi, Jan 2: Indian stock indices continued to trade in the red on Tuesday, extending losses from the previous session, primarily attributable to profit booking after a stellar cumulative performance in 2023. High valuations, as analysts pointed out, too, are a concern.

Benchmark indices – Sensex and Nifty — settled Tuesday’s session 0.4-0.5 per cent lower from the previous session.

“Markets traded volatile for yet another session and lost nearly half a per cent, in continuation to the prevailing consolidation phase. The beginning was subdued and pressure in the banking, auto and IT majors was weighing on the sentiment however resilience in the pharma and energy majors capped the damage,” said Ajit Mishra, SVP – of Technical Research at Religare Broking.

“Meanwhile, we feel it is prudent to prefer defensive viz. FMCG, pharma and stay selective in others,” Mishra added.

According to Vinod Nair, Head of Research at Geojit Financial Services, “Ahead of the impending results season, investors are adopting a profit booking strategy.”

Cumulatively, the past 12 months have been stellar for investors who parked their money in Indian stocks. Though there has been some turbulence, first during the Adani-Hindenburg episode and lately during the initial days of the Israel-Hamas war, the calendar year 2023 gave handsome monetary dividends to stock market investors.

In 2023, Sensex and Nifty gained 18-19 per cent, on a cumulative basis. The indices had gained a mere 3-4 per cent in 2022.

Foreign Portfolio Investors (FPIs) have trained their sight towards India, becoming net buyers in the country’s stock market in the calendar year 2023.

In December, especially, they made a beeline to invest in Indian stock markets, with a cumulative accumulation of Rs 66,135 crore. To put it into context, the entire year saw an inflow of about Rs 171,107 crore, and notably, over one-third of it came in December. In November, the FPI inflow was Rs 9,001 crore, data from the National Securities Depository (NSDL) showed.

Firm GDP growth forecast, inflation at manageable levels, political stability at the central government level, and signs that the central banks world over are done with their monetary policy tightening have painted a bright picture for India.

Going ahead into the week, the key triggers for the markets in the first week of the new year include S&P Global Manufacturing PMI and Services PMI due on Wednesday and Friday, respectively.

On the macroeconomic front, the US Federal Reserve will release the minutes of the latest monetary policy meeting on Thursday.

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