The benchmark indices have slumped on the bourses at noon today and are near the lows of the day on unabated selling pressure. At 2.40 PM, the Sensex was down 2.50 percent or (-)1,489.55 at 58,146.46 points. The Nifty was below 17,500. It nosedived 2.36 percent or (-)419.40 at 17,345.40.
Rahul Shah,Co-Head of Research at Equitymaster said, "High growth expectations have been built into the stock market valuations for quite some time now. And if these expectations don't materialise soon enough, we may see further downward pressure on prices. From a valuations perspective, the broader market is already quite expensive. The only thing holding it up was hopes of quick recovery in corporate earnings. Any delay there or any bad news on that front and there could be more downside in the offing. If your time horizon is ten years, you don't have to worry a great deal as long term India story is intact. But if it is 2-3 years, then it may be a good idea to either partially or fully exit your most profitable investments and take some money off the table."
Nirav Karkera, Head of Research, Fisdom, said, "Current valuations seem to have priced in a fuller earnings recovery rather aggressively. With a large part of the festive and earnings season behind us, there are lesser triggers for an upside versus variety of looming factors to downside risks. From a macro standpoint, reports on deterioration of the public health situation, increased probability of liquidity rollback and emerging inflationary trends are dampening investor sentiments.
"Getting closer to today's dip, re-evaluation of the index heavyweight RIL's deal with Saudi Aramco and continued selling pressure on shares of India's largest IPO PayTM are bearing heavy on indices. Most traders are perceiving the current pullback as an indicator for further downside, hence snowballing into a surge in short positions on large counters and broader indices alike. The perception of the moment seems to have also led to many investors taking some money off the table, albeit for a shorter period.”
