Mid-day Mood | Bull ride takes a pause as Sensex, Nifty trade lower; broader indices outshine

The broader markets, however, outperformed benchmark indices despite Street concerns of 'valuation comfort' over largecaps

The equity market took a breather from its record-breaking run on the December 18 afternoon deals, as the benchmark Sensex and Nifty 50 traded lower. Sectors like bank, IT, and realty, which zoomed in the in the past few sessions, saw some profit-booking in afternoon deals.

The correction is quite "usual” for the market after seven consecutive weeks of buying, said Ajit Mishra, senior vice president-technical research, Religare Broking. Now, that the market had entered the “overbought zone”, some sideways momentum was expected to continue in the near-term but nothing too intense, he added.

Anand James, Chief Market Strategist at Geojit Financial Services, said the correction was minor and he didn’t expect a “collapse to unfold right away”.

"Having breached the 21,430 objective on December 15, sustainability of ongoing uptrend could be put to test this week. We feel difficulty in seeing Nifty past 21,600/660 with the present run, with 21,360 offering the first downside support," he said.

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At 12.30 pm, the Sensex slipped 112 points or 0.1 percent to 71,371 levels and the Nifty was flat at 21,433 levels.

The broader market outperformed the benchmark indices despite Street’s concerns about “valuation comfort” over largecaps.

The Nifty midcap 100 was up 0.4 percent and the smallcap 100 0.7 percent.

Across sectors, defensive plays that lagged in earlier trades took charge. The Nifty pharma index was up over a percent and the Nifty consumer durables 0.6 percent.

"Last week, we saw rate-sensitives take charge, this week we are seeing defensive pack to be participating. It is good news that we are seeing overall sectoral participation during this market trend," Mishra said.

Among individual stocks, the NSE Nifty top gainers included Bajaj Auto, Sun Pharma, and Eicher Motors.

Shares of the Bajaj Auto gained nearly 3 percent. Volumes were high as 6 lakh shares changed hands, topping the one-month and one-week average of 5 lakh shares. The surge comes after the stock fell nearly 1 percent in the previous trading sessions.

In the last two weeks, Bank Nifty has gained over 7 percent and Nifty IT 11 percent against a 6 percent rise in the benchmark Nifty.

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What should you bet on?

Analysts consensus view is to adopt “buy-on-dips” strategy.

"Going forward, it is advisable to have a selective approach and look out for thematic movers amidst the ongoing sectoral rotation," Sameet Chavan, Technical Analyst-Angel One, said.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, advised investors to stick to selective “largecaps” and consider booking some profits in mid-and smallcaps where valuations are quite high.

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