Mumbai: After hitting a record $2 trillion market capitalisation on Wednesday, the Indian equity markets witnessed broad based selling on Thursday amidst extreme weakness in global stocks as investors turned cautious following the political crisis in US where allegation of Donald Trump’s interference with the federal investigation has raised uncertainty over his presidency.
The development triggered a major sell-off in Wall Street with major US equity indices posting their biggest intra-day slide since September 2016.
Tracking overnight losses in US equities, the Nifty opened the day lower with a huge gap and remained subdued throughout the session. The Nifty finally closed the session at 9,429.45, down 96.30 points or 1.01 per cent. The Sensex slumped 223.98 points or 0.73 per cent to end the day at 30,434.79.
On Wednesday, both the Sensex and Nifty scaled to their lifetime high with the market capitalisation of domestic equities crossing the landmark $2 trillion market capitalisation.
With Thursday’s sell-off, the combined m-cap of Indian equity markets fell to $1.95 trillion. “The underlying sentiments remains bullish and one should not be worried much about these kind of intermittent corrections in the markets. The markets would see profit booking at different stages due to various reasons. However such corrections provide good opportunity for investors to commit fresh money,” said Deven Choksey, managing director, K.R. Choksey Securities.
On asked whether the valuations of Indian markets are high when compared to other markets, Mr Choksey said instead of comparing valuations, it would be better to compare growth prospects.
“The prospects of corporate earnings growth are higher in India. It is expected to grow in the range of 15-20 per cent as compared to 5 per cent growth in other markets. So our markets deserves premium valuations,” he added.
The market breadth, which indicates the overall health of the market, remained weak with 2,077 stocks traded on the BSE closing the day in the red.
