The markets are in profitbooking mode. The cuts are getting deeper after a soft start. Both the Sensex and the Nifty are down around a percent each after the sharp run-up seen yesterday. The significant sectors under pressure include technology, metals, power, FMCG and select financials.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments pointed out that “After the sharp surge in the market yesterday, mainly in response to the ceasefire, it is time to take stock and try to understand the likely direction of the market, going forward. It is important to understand that the sharp 916-point surge in Nifty was not caused by institutional activity. The combined FII and DII buying yesterday was only Rs 2694 crores. This means the market surge was triggered by short-covering and HNI plus retail buying. This implies that institutional activity is likely to remain subdued in the coming days which may constrain the continuation of the rally.”
Here are three reasons why the markets are falling today-
Profitbooking, investors taking a breather
The markets saw a stupendous rally yesterday. The indices recorded highest gains in a session since February 1, 2021. According to Siddarth Bhamre, Head Institutional Research-Asit C. Mehta Investments Intermediates explained that the “run-up yesterday was significantly more than expected. As a result we are seeing some amount of profitbooking and mean reversion in the market after going overboard yesterday. However, the broad trend should remain intact, and there is still a lot of liquidity in the market. We may see participation from key sectors that did not participate completely yesterday.”
Tech stocks under pressure
The tech sector, which has a significant weightage on the benchmark Indices, is under pressure. The Nifty IT Index is down well over 1% dragged lower by Index heavyweights like Infosys, TCS, Wipro. These stocks had seen a significant run-up yesterday and are now seeing profit-booking in today’s trade. That apart, the slowing deal wins in April are also impacting sentiment in the tech sector.
Steel stocks are under pressure
Steel sector stocks are under pressure this morning after India proposes retaliatory tariffs against US’ steel and aluminium. The country’s delegates have informed the the World Trade Organisation (WTO) about proposals to impose duties on certain US-made products shipped to India. This is in response to US tariffs on steel and aluminium products produced in India.