After opening flat, Nifty hit a fresh record high in trade of 15,800 points but soon pared the gains. At the closing, Sensex ended lower by 334 pts., while Nifty settled below 15,650 points. Nifty Bank underperformed with loss of over 0.8% percent. Broader markets too dropped with Nifty Midcap 100 settling lower by 0.72 percent.
Here are the probable reasons for the fall in the stock markets today:
1. All Nifty sectoral indices contribute to the weakness:
At the time of writing this copy, all of the Nifty sectoral indices from Nifty Auto to Nifty Realty traded in the red, down anyway between 0.48 percent-2.4percent, with maximum weakness seen in the Nifty Media pack. Banking sector is seeing sell off for the second day in a row even after the Niti Aayog has suggested the PSB candidates that can likely be privatized going forward in this fiscal year.
2. Heavyweights drag:
Heavyweight stocks including the likes of Reliance Industries, Bajaj Finance, ICICI Bank, HDFC twins, Adani Ports and Larsen & Toubro which have a high weightage in the Nifty 50 index fell anyway between 1-2.75%.
3. Global markets:
In the global market, European shares hovered near record levels. The pan-European STOXX 600 index in early trade was flat after hitting a record high of 455.66 in the earlier session. Meanwhile, other European indices such as FTSE, German DAX and French CAC traded weak by up to 0.54%
Also, most Asian markets ended in the red, led by Kospi which tumbled as much as 0.97%.
4. Profit booking at higher levels:
Markets were seeing continuous uptrend for the last 4-5 trading sessions and so was ought to see some correction. Further there is seen profit booking in energy, telecom and auto pack.
Do not panic! At such higher levels, when there is a high leverage in the market, it is quite possible that we may see such knee-jerk profit booking days and then witness a rebound. The overall trend remains strong, however it will be prudent to take off partial profits from high beta stocks. For fresh entry, only prefer stocks that are fundamentally very sound, noted Aditya Birla Money Research.