Sensex, Nifty slip in early trade as Powell’s valuation warning spooks investors

Nifty extended losses to the fourth session in a row.

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Dalal Street opened on a jittery note on Wednesday, September 24, echoing weak global cues as US Federal Reserve Chair Jerome Powell’s commentary on valuations weighed on sentiment.

At 09:20 am, the Sensex was down 275.47 points or 0.34 percent at 81,826.63, and the Nifty was down 84.70 points or 0.34 percent at 25,084.80. About 1149 shares advanced, 1351 shares declined, and 177 shares unchanged.

At the open, sectoral indices were mostly in the red. Nifty IT led the losses with a 0.7 percent decline, followed by Nifty Auto down 0.6 percent and Nifty Metal slipping 0.4 percent. Realty, Infra, Media, Pharma and FMCG also edged lower with cuts of 0.2 to 0.4 percent.

On the positive side, PSU Bank was the lone gainer, rising 0.89 percent. Energy also eased 0.41 percent. Overall, the market breadth across sectors leaned negative at the start of trade, as Powell's commentary led to selling across the globe.

“We do look at overall financial conditions, and we ask ourselves whether our policies are affecting financial conditions in a way that is what we’re trying to achieve. But you’re right, by many measures, for example, equity prices are fairly highly valued," said Powell.

Following his remarks, Wall Street's main indices fell from their highs, seeing some selling pressure. Nevertheless, Powell noted that it is not up to the Federal Reserve to determine what the fair valuations are or what the correct stock price should be.

"Now a concern in the market globally is the high asset prices. Prices of assets be it stocks, gold, silver, bit coins are high. This concern was articulated by the Fed chief Jerome Powell yesterday in his speech at Rhode Island. Powell reiterated the risks to inflation and employment, too, signalling that the Fed policy, going forward, will be challenging," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

On the technical front, Anand James, Chief Market Strategist, Geojit Investments noted that while 25000 held downsides, upsides were capped by the 25,278 region as pencilled in yesterday. "While we wait for a break beyond these extremities for directional moves, momentum appears dull, lowering the prospects of sustainable moves. Until we see a close above 25,330, the 24,880-800 trajectory will persist."

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