Markets Witnessing Profit Booking At Higher Index Level

Mumbai, November 6: Traders and investors are discussing one major market activity, that though the BSE benchmark S&P Sensex has crossed its previous all-time closing at a high of 40,483 points on November 4, 2019, why the other important measure, NSE Nifty is taking more time to exhibit the same.
The Sensex closed at 40,312 level on June 4, 2019, all-time high while Nifty peaked at 12,089 on June 3, 2019; however, even after five months of trading, it is yet to cross the psychological barrier of 12K.
Market folks attribute two reasons for the aberration. First - among both the measures, Nifty is a broader index comprising 50 stocks whereas Sensex has 30. The second being, the Nifty is more liquid compared to Sensex. Nifty’s average daily cash market turnover ranges between Rs.35,000-40,000 Crore while that of BSE is barely 10 per cent.
Experts say that currently what we are witnessing in the market is that the interest is seen only among quality stocks and more liquidity chasing fewer (handful of index) stocks. This is because of lack of full fledged sentiment revival. Whatever buying interest we have witnessed, it was following the release of series of booster doses injected by the Government.
However, what is the testimony that the interest has revived in the market? That can be gauged only when the broader rally begins, that is when the small cap and mid cap sector stocks begin participating in the market upturn, they say.
Shrikant Chouhan, Senior Vice President, Equity Technical Research, Kotak Securities says, “The market has taken a breather and this happens whenever we see profit taking. Excitement is missing as majority index participants have already declared their Q2 numbers and now traders will have to wait for either domestic developments or global development on the trade tariff front.”
Developments related to trade and commerce at the global level is shaping the local market trend. Also, the domestic negative news flow is also impacting the sentiment.
Sharing his views on the current market scenario, Vinod Nair, Head of Research, Geojit Financial Services says, “Consolidation is seen in the market and for stability we need further developments in global trade policies and fresh stimulus from the government. Further contraction in service PMI in October due to muted demand, in a way forced investors to turn cautious. Based on ongoing result outcome investors are focusing on quality stocks while mid and small caps are underperforming.”
Dealers are of the opinion, though the markets have moved up and some of the benchmarks have created new closing highs, what is lacking is the strength and that is is an indication of of lack of participation of retail investors. Whatever upswing in the prices we have seen is is on the back of institutional money, which is volatile in nature. This is also one of the reasons why we are witnessing profit booking at the higher levels of index and markets are unable to sustain at new high levels, they add.
Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services says, “While the markets consolidate near its peak, the positive momentum should continue for a while. With absence of any major events, focus would continue to be on the results season with stock specific action likely over the next few days”.