The cut gets deeper for the markets in afternoon trade. The Sensex is down well over 600 points intra-day and the Nifty cracks below 24,600 again. The key losers in trade include Adani Group stocks, Coal India, Bajaj Finserv and L&T.
The small and midcaps are however showing a relative resilience and the BSE Smallcap Index is trading flat. The BSE Midcap Index is down around 0.4%.
Three reasons why markets are falling today?
Some of the key reasons why the market are under pressure today –
Valuations worries
Despite the significant correction in the past few months, India market valuations are still edging up on the higher side. A recent report by Kotal Institutional Equities highlighted that the “expensive valuations across sectors and stocks.” As reported by Financial Express.com, Sanjeev Prasad of Kotak Institutional Equities pointed out that, “domestic growth headwinds across consumption, investment and outsourcing sectors and global growth and inflation challenges” are likely to act as headwinds for the Indian market.
FIIs not comfortable buying Indian stocks beyond certain valuation
FIIs were net sellers yesterday. They sold equities worth Rs 2,590 crore. This also is weighing on the market sentiment. Market expert Deepak Jasani pointed out that “one of the reasons why the Indian markets are seeing some amount of selling stems from the valuation concerns by FIIs. We have seen that FIIs were net sellers in trade yesterday and this was primarily because they are not comfortable buying Indian stocks beyond a certain valuation. This has been clouding overall buying sentiment too.”
Global concerns
Some global concerns are also impacting sentiment. China’s factory activity in May slipped for the first time in eight months indicating US tariffs are perhaps hurting the manufacturing superpower. The Caixin/S&P Global manufacturing PMI fell to 48.3 in May from 50.4 in April, well below analysts’ expectations. Most Asian markets ended in the red and US Futures are trading lower. Nasdaq-100 Futures and Dow Jones Industrial Average Index Futures is down 0.4% each.