Sensex, Nifty extend muted moves to day 2; more 'profit-booking' likely ahead of holiday season: Analysts

Market experts believe that the retail 'exuberance' is slowly cascading into 'fatigue'

Bears extended their grip on domestic markets in the morning session on December 21 amid negative cues overseas. This comes after benchmarks Sensex and NSE Nifty 50 hit record highs in Wednesday's early trade. Market experts believe that the retail 'exuberance' is slowly cascading into 'fatigue' as investors have been booking profits across the board. They expect this trend to continue for the next couple of days ahead of holiday season.

"We will see time-to-time profit booking taking place for the next 10 days as institutional buying takes a step back ahead of the holiday season," said Deven Choksey, Managing Director at KRChoksey Holdings.

Gautam Shah, Founder and Chief Strategist at Goldilocks Premium Research also agreed, saying that correction was much-needed and 20,500 will be a base for Nifty going ahead.

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Listing next market triggers, Ajay Bagga, Chairman of Elyments Platforms said that new institutional allocation in January and October-December (Q3FY24) results will guide investors.

Within the first hour of trading, Sensex slipped 250 points or 0.3 percent to 70,256 levels, while the NSE Nifty 50 declined 106 points or 0.5 percent to 21,043 levels, as of 9:50 am.

Broader markets, too, slipped in negative territory as Nifty Midcap 100 and Nifty Smallcap 100 indices declined up to 0.1 percent.

Going ahead, two trends are important - one, the correction in mid and smallcaps and second the domestic institutional investors turning buyers towards the end of trading day, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

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"The vulnerability of the mid and small caps to correction remains since the valuations are excessive," he added.

However, Vijayakumar recommended investors to 'wait' for markets to stabilise and then buy high quality largecap stocks on declines.

Sectorally, Nifty Media index was the star performer as it gained over 2 percent to outperform benchmark Nifty, as of 9:50 am.

Others like Oil & Gas, IT, and Metal indices also saw some mild gains in early deals.

"Investors participating in Oil & Gas comes on the back of steady crude prices. One can say that the Red Sea attacks may impact the sector but we believe that the Israel-Hamas war is already factored in," said Choksey of KRChoksey Holdings.

On the flipside, Nifty Realty, Nifty Bank, and Nifty Pharma indices were some of the top sectoral losers.

The overall sentiment for Bank Nifty remains bearish, said Kunal Shah, Senior Technical & Derivate Analyst at LKP Securities. He suggested investors to exercise a cautious approach with a preferance for selling on any upward movements.