Kotak Mahindra Bank was the top loser in the Sensex pack by slumping 4.41%, followed by IndusInd Bank, Axis Bank, ONGC, HDFC Bank, Bajaj Auto and Reliance Industries.
Extending their losses for the fourth straight session, the markets on Monday closed two-week lows, with the benchmark Nifty giving up 11,000 mark. The Sensex crashed 667 points. The stock markets have declined 2.73% in the last four trading sessions.
The Nifty declined 173.6 points, or 1.57%, to close at 10,899. The Sensex closed 1.77% down at 36,939.6.
Profit taking, coupled with disappointing quarterly results, led to the big fall.
Devarsh Vakil, deputy head – retail research, HDFC Securities, said: “The market has run up almost 50% from its lows and so, this is an expected correction on account of profit taking. Additionally, the economic data which came in and some disappointing results also lowered the market sentiment.”
According to a Kotak Securities Private Client Group report, after the recent run-up in July, the overall risk reward balance for the markets has become unfavourable. “After the sharp run up, quality non-financial stocks are fully valued on FY22E EPS; most of them are back to or above pre-Covid-19 price levels. Similarly, most growth stocks are also now trading at expensive valuations. The overall risk-reward balance has become unfavourable. Hence, one needs to remain cautious on markets from here on.”
The report added that one needs to have a ‘bottoms up’ approach while selecting stocks.
Foreign portfolio investors (FPIs) remained buyers for three straight months — May to July — buying stocks worth $5.2 billion. FPIs have been attracted to the Indian markets as a result of block deals by blue chip companies and due to surging global liquidity.
According to Friday’s provisional data, FPIs sold stocks worth $126.13 million, while domestic institutional investors bought shares worth $58.71 million. The futures and options segment on the NSE witnessed a turnover worth Rs 10.8 lakh crore against the six-month average of Rs 14.89 lakh crore.
Among the broader markets, the Nifty midcap index outperformed the Nifty, with the Nifty Midcap and Nifty Smallcap rising by 0.03% and 1.10%, respectively. Major losers on the Nifty were UPL, IndusInd Bank, HDFC Life Insurance, Kotak Mahindra Bank and ONGC, down by 5.36%, 3.73%, 3.68%, 3.57%, and 3.38%.