February 18, 2024
Stock Market Morning Trade Jan 25-2024: Nifty and Sensex Dip Amid Profit Booking
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Stock Market Morning Trade Jan 25-2024: Nifty and Sensex Dip Amid Profit Booking

Stock Market Morning Trade Jan 25-2024: Nifty and Sensex Dip Amid Profit Booking

Stock Market Morning Trade Jan 25-2024: Nifty and Sensex Dip Amid Profit Booking

The Nifty 50 and Sensex experienced a downturn of about 1% each in morning trade on Thursday, January 25, following a day of strong gains driven by profit booking in most stocks. Nifty 50 opened flat but slipped nearly 1% to hit the day’s low of 21,251.25, while the Sensex, opening 38 points lower, fell over 1% to reach the day’s low of 70,324.14.

As of 11:05 am, the Sensex stood 1% down at 70,349.67, and the Nifty 50 was 0.92% down at 21,255.95. The selloff was widespread, impacting most sectoral indices. Nifty Bank fell 1%, and IT, Pharma, and Financial Services indices each witnessed a decline of over 1%.

Reasons Behind the Market Downturn:

  1. No Valuation Comfort:
  • Market experts highlight the lack of valuation comfort following recent sharp gains. Elevated valuations in the mid and small-cap spaces pose a risk, according to G. Chokkalingam, Founder and Head of Research at Equinomics Research.
  • V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, notes a significant anomaly in the market, with some pockets experiencing high valuations while others remain fair or even attractive. The discrepancy raises concerns about sustainability.
  1. Sustained Selling by FPIs:
  • Foreign portfolio investors (FPIs) have been actively selling Indian equities, amounting to ₹19,308 crores in January so far. Rising US benchmark bond yields and fading optimism about rate cuts contribute to FPIs’ cautious stance.
  • Concerns arise as investors now anticipate the Fed’s first interest rate cut in May rather than March. The rise in global bond yields, particularly in the US, is viewed as a matter of concern by Vijayakumar.
  1. Caution Ahead of Central Bank Meetings:
  • Investors exhibit caution ahead of crucial central bank meetings, notably the European Central Bank (ECB) meeting, where interest rates are expected to be maintained. There are speculations about potential cuts later in the year.
  • The US Fed’s policy meeting scheduled for January 30-31 adds to investor caution, with a keen interest in the Fed Chair’s commentary on the economy and signals on potential rate cuts.

Additional Factors Weighing on Market Sentiment:

  • Unimpressive Q3 numbers, ongoing geopolitical tensions, and cautious anticipation of the Interim Budget contribute to the overall negative sentiment in the domestic market. Investors remain watchful as various factors converge, impacting market dynamics.

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