The Nifty, which touched an intraday high of 11,525.29 could not sustain the upward move and witnessed profit taking.
Equities ended Tuesday on a flat note as markets took a breather on profit taking. The benchmarks closed the session with a positive bias, the 50-share Nifty rose by 5.8 points or 0.05% to close at 11,472.25 whereas the Sensex rose by 44.8 points or 0.12% to close at 38,843.88.
Markets witnessed a choppy trading session swinging between gains and losses. The Nifty, which touched an intraday high of 11,525.29 could not sustain the upward move and witnessed profit taking. For this month, the markets have risen by 5.2% and are now just 7.3% away from their all-time highs. The benchmarks on Tuesday were dragged down by heavyweights such as Reliance Industries and Infosys on profit taking.
Ambareesh Baliga, an independent market expert, said, “The strategy at the current levels in the market is to keep booking profits at every rise. I don’t know when the market will reach its top but the valuations are not comfortable. For every Rs 100 transaction in the market, I would suggest selling of Rs 80 and the buying is Rs 20. This is because there still are some pockets in the market where the valuations are still decent.”
Meanwhile, according to ICICI Securities, even with the easing restrictions contact-heavy sectors may take more time to recover. The brokerage said, “The general consensus in the scientific community is that an effective and safe vaccine may not become available for public use before mid-2021. Hence, while the government may relax lockdown restrictions further, consumers are likely to voluntarily avoid activities that require heavy human contact. As a result, we expect economic activity in contact-intensive sectors to remain suboptimal at least for the next 2-3 quarters.”
Foreign portfolio investors have bought Indian equities worth $5.6 billion in total till August 24 , the highest so far this year and the highest monthly inflow since 2010. The markets have witnessed strong inflows ever since they crashed in March since many blue-chip companies have hit the market to raise funds to cushion themselves in the current economy. The domestic institutional investors have, however, been sellers this month pulling out Rs 9,007.24 crore. On Monday, FPIs bought stocks worth $28.8 million whereas DIIs sold stocks worth $44.16 million. The futures and options segment witnessed a turnover worth Rs 17.5 lakh crore against the six month average of Rs 14.9 lakh crore. The cash market too saw volumes worth Rs 61,070.32 crore against the six month average of Rs 51,793.2 crore.
Globally, the stock markets were rallying after the US and China assured adherence to the trade deal, additionally, the markets were cheering progress surrounding vaccine development. European markets such as the United Kingdom, Germany, and France were up between 0.16% to 0.68%. Asian markets too, ended in the green with bourses in Singapore, Taiwan, and South Korea rallying between 0.8% to 1.58%.
The biggest gainers on Nifty were Tata Motors, Bajaj Finance, State Bank of India, Tech Mahindra, as well as Eicher Motors, up by 5.32%, 4.75%, 3.38%, 2.28%, and 2.18% respectively. The biggest losers were GAIL, NTPC, Sun Pharmaceuticals, Tata Steel and Shree Cement down by 1.72%, 1.52%, 1.40%, 1.29%, and 1.17%.