In morning trade on Thursday, the BSE Sensex experienced a significant downturn, shedding 700 points, primarily led by a sharp decline in Tech Mahindra.
The BSE Sensex was recorded at 70,331.85 points, marking a decline of 728.46 points or 1.03 percent. Tech Mahindra witnessed a plunge of over 5 percent, attributed to weak quarterly results. Other major contributors to the decline included Axis Bank and Sun Pharma, both registering drops of more than 2 percent.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented on the ongoing tug of war between Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs), stating that high volatility is expected in the near term. He suggested that investors may utilize this volatility to make adjustments to their portfolios.
An interesting observation in the market is the disparity in valuations, with some sectors exhibiting high valuations while others present fair or even attractive valuations. Vijayakumar pointed out that certain Public Sector Undertaking (PSU) stocks have seen inflated values based on optimistic expectations tied to order flows, particularly in areas like shipbuilding. However, the conversion of these order flows into profits may take a considerable amount of time and is not guaranteed. Conversely, sectors like banking are considered fairly valued, with strong performance and positive prospects. Vijayakumar highlighted the value present in blue-chip stocks such as HDFC Bank.
Concerns were raised about the rising bond yields in the United States, signaling potential challenges. The global stock market rally, triggered by the Federal Reserve's pivot, saw the 10-year bond yield drop from 5 percent to around 3.8 percent. However, the yield has since risen to 4.18 percent, indicating that a Fed rate cut may not occur until the second half of 2024. Vijayakumar also noted a positive trend in the Q3 results, particularly the improving margins in the auto industry.
(With Agency Inputs)
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