Sensex, Nifty set to end 2023 on strong note with mild profit-booking after record run

On a year-to-date basis, the Nifty 50 is set to close 2023 curtains with 20 percent gains and the BSE Sensex with over 18 percent surge

A good year for domestic equities is drawing to an end, with the market near record highs amid retail exuberance and dovish Federal Reserve bets. In the run-up to the closing bell of 2023, the benchmark indices saw some mild profit-booking on December 29 morning deals after it clinched record highs in the previous session.

The BSE Sensex was down 188 points or 0.2 percent to 72,222 levels, while the NSE Nifty 50 was down 53 points or 0.2 percent to 21,725 levels, as of 10am.

On a year-to-date basis, the Nifty 50 is set to end 2023 with 20 percent rise and the BSE Sensex with over 18 percent surge.

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The guiding factor for further move would now be the October-December quarter results, Raja Venkatraman, co-founder of Neotrader, told Moneycontrol. "The Q3 results will now add more flavour to the overall market."

Venkatraman expects brief profit-booking on December 29, the last trading day of 2023, but states that the undertone stays bullish. "Through the entire month, we have seen a 1,800-point rise from the lows. One needs to understand that minor dips is a natural phenomenon and will make the market healthy," he said.

On the other hand, Sahil Kapoor, head of products and market strategist at DSP Mutual Fund, advised investors to not start the year with large expectations as markets trade at premium valuations versus historical averages.

"Historically, when the Nifty trades at 22x price-to-earnings (PE) multiple, forward returns ultimately get tapered off. So, we may continue to see some successive rises in the next few sessions but will eventually hit an air pocket of consolidation or correction as we step into 2024," he told Moneycontrol.

Also read: Investors should seriously tone down their expectations for 2024: Radhika Gupta

Mild profit-booking was also imminent at the broader-end of markets, with Nifty Midcap 100 and Nifty Smallcap 100 indices slipping 0.1 percent each within first hour of trading. Fear gauge India VIX, meanwhile, continued to hover near its 9-month high levels.

Apart from Nifty Auto and FMCG indices, all sectoral indices slipped in the negative territory on December 29 morning deals. The worst laggard emerged to be Nifty Oil & Gas, Metal, and PSU Bank indices that saw run-up in recent days.

The overall market consensus was that investors should use every 'dip' to 'buy' instead of 'sell' as underlying macros remain robust for India.