Sell-off in PSUs pulls indices lower

Mumbai: Benchmark Sensex plunged by 523 points on Monday due to profit taking in metal and banking shares amid mixed trends in global markets.

The 30-share BSE Sensex settled 523 points or 0.73 per cent lower at 71,072.49 as 22 of its components closed in the red and eight in the green. The barometer opened higher and touched a high of 71,756.58 in early trade. However, profit taking in Reliance Industries, metal giants and banking shares dragged the index to a low of 70,922.57 during intra-day trade. The broader NSE Nifty also closed 166.45 points or 0.76 per cent lower at 21,616.05 with 34 of its constituents ending in the red. Metal, banking and select oil shares succumbed to selling while pharma and IT shares bucked the trend.

“An uptick in exchange margin requirements caused a decrease in positions, primarily in mid and small caps. Aside from the pharma and IT sectors, selling was widespread, with notable struggles seen in PSU banks,” said Vinod Nair, head (research), Geojit Financial Services. “The premium valuation gap between mid to large-caps has notched to its all-time high. Despite a robust economic forecast, corporate earnings are expected to slow due to moderated operating margins. It is going to be a challenge for the broad market to sustain the premium valuation,” added Nair.

“Nifty declined further after a consolidation breakdown on the hourly chart, indicating an increase in pessimism. The daily chart shows the index forming a lower top, signaling diminishing bullish sentiment,” added Rupak De, senior technical analyst, LKP Securities. BSE smallcap index fell 3.16 per cent while midcap lost 2.62 per cent and largecap closed 0.90 per cent lower. Among the sectoral indices, utilities saw a steepest fall of 3.60 per cent, followed by realty which declined by 3.01 per cent and power that went down by 2.90 per cent.