Markets fall amidst profit booking, Covid concerns; sensex down 931 points

Indian equity benchmarks witnessed wild swings on Wednesday, with both the S&P BSE Sensex and the National Stock Exchange Nifty hitting new highs intraday but ending the session with the biggest losses in many months amid profit booking.

Concern about the rise in Covid cases and elevated valuations in midcap and smallcap stocks also weighed on sentiment.

During the day, the Sensex rose to 71,913 before giving up gains in the latter half of the session and ending at 70,506, a decline of 931 points, or 1.3 per cent. Investors lost Rs 8.91 trillion on Wednesday . Wednesday’s close is the worst fall for the Sensex since October 26, 2023. The Nifty ended the session at 21,150, a decline of 303 points, or 1.4 per cent — the worst fall since March 13, 2023. Profit booking after a good run was cited as the primary reason for the market rout. The benchmark indices made gains in the past seven weeks on the back of strong macroeconomic (macro) numbers and the prospect of rate cuts by major central banks in the Western world.

The other reason could be the results of the recently concluded state elections, which raised bets for policy and regime continuity.

However, investors have been taking money after the run-up.

“The long build-up was based on the assumption that there would be continued buying by foreign portfolio investors (FPIs). But they have been booking profits this week. A bit of correction is par for the course.
One cannot say the market trajectory has changed dramatically,” said U R Bhat, co-founder of Alphaniti Fintech.

FPIs were net sellers to the tune of Rs 1,322 crore, according to provisional data from exchanges.

Concern about valuations, especially in midcaps and smallcaps, after gains this year and the recent spurt in Covid cases, have also been weighing on investor minds.