Sensex Falls 45 Points Amid Consolidation, Midcaps Outperform

Foreign investors have bought Indian shares worth Rs 4,088 crore on Tuesday.
Foreign investors have bought Indian shares worth Rs 4,088 crore on Tuesday.

Indian stocks market indices Nifty and Sensex took some breather on Wednesday after yesterday's stellar rally. The Nifty fell 2.2 points to 9,084.8 while the Sensex settled 44.52 points lower at 29,398.11. The rupee however continued its upwards trajectory against the US dollar, rising to 16-month high of 65.41 against the greenback. The rupee had closed at 65.82 against the US dollar yesterday. IT stocks came under some selling pressure today as the rupee's surge against the dollar will hurt their earnings when they get converted to the Indian currency. The IT sub-index of NSE fell 1.68 per cent. However, midcap stocks outperformed the broader indices by rising over 1 per cent in today's trade.

Here are 10 things to know:

1) Analysts expect a consolidation in the Indian markets after the 11 per cent year-to-date rally which has taken Nifty to all-time highs.

2) Sanjay Sinha, founder of Citrus Advisors, says Nifty is likely to remain in the range between 8900-9500.

3) Some analysts have voiced caution over the market valuations which they say look stretched after the current leg of the rally. But they say that the liquidity factor could drive markets even higher from these levels.

4) Foreign institutional investors have bought Indian shares worth Rs 13,026 crore this month so far. On Tuesday alone they bought shares worth Rs 4,088 crore.

5) Domestic institutional investors, with their strong inflows, have also supported the market in the last six months, buying over Rs 40,000 crore shares.

6) Gautam Chhaochharia, head of India research at UBS Securities, said fundamentally markets look expensive not just from the short-term perspective but also from a medium-term perspective. The fair value of the market looks 8,800, he said, adding that from trading perspective, it has an upper range of 9,700.

7) TS Anantakrishnan, managing director at Varanium Capital Advisors, says that the current leg of the rally has made valuations expensive, particularly for Nifty50 stocks. But there are a lot of opportunities in metal, NBFC and cement companies, he added.

8) Rahul Singh, managing partner of Ampersand Capital Investment Advisors, said gains from hereon could be gradual for Indian markets after the sharp year-to-date rally. He sees pockets of opportunity in specialty chemicals, capital goods, infra stocks and financial services stocks.

9) The market will be eying the current Budget session of Parliament and the progress of key GST Bills, says market expert Ajay Bagga. The government is planning to roll out the new tax regime from July.

10) On the global front, the US Federal Reserve will announce its rate decision today. Analysts say that a rate hike is factored in by the market but a hawkish commentary could induce volatility in emerging markets.