Profit booking spoils record-smashing rally

Representational Image (Photo: Getty Images)


Disregarding positive global cues and World Bank’s laudatory comment on India’s long-term growth potential, Dalal Street participants disrupted the record-smashing run of main equity indices of Bombay Stock Exchange and National Stock Exchange with a spell of profit booking, primarily in those shares/segments that have gained most in recent weeks.

Analysts said selling pressure at higher level like in 2017 will be a normal feature of stock trade in 2018 as well but the overall bull run may continue undisturbed as economic fundamentals display distinct improvement.

While indices were struggling to fight back profit booking pressure, the news came that the Union Cabinet has further relaxed FDI norms, permitting 100 per cent foreign flow into single-brand retail and 49 per cent FDI in Air India which helped equity market to cut its losses.In the final 30 minutes, BSE and NSE main indices pared some losses but closed with a little downside bias.

The Sensex closed at 34,433.07 points, registering a decline of 10.12 points or 0.03 per cent.

The Nifty lost 0.05 per cent or 4.80 points to finish at 10,632.20 points. Bank shares were among those suffering profit booking.

The Nifty Bank lost 0.34 per cent or 86.50 points to close at 25,617.30 points. In the Sensex pack, seven shares ended up and 24 were down. For the Nifty, the advance-decline ratio stood at 18 versus 32.
Today, profit booking spared IT stocks after the United States administration moderated its H1-B visa policy for Indians already working there.

Analysts pointed out that the profit booking was seen across all regional markets on account of no let-up in rising crude oil prices. The Asia-Pacific MSCI or Morgan Stanley Composite Index (outside Japan) dropped nearly 0.5 per cent intra-day today as investors turned to profit booking.

Analysts see business in Dalal Street moving in a narrow range ahead of Infosys Technologies kicking off Q3 earnings season in a couple of days.

In the run-up to Budget 2018-19 presentation on 1 February, business & industry and financial sector are airing their expectations more candidly, say analysts, since it would be the last comprehensive exercise by the finance minister, Mr Arun Jaitley, before a series of state assembly and Parliament elections.

However, the 30-share Sensitive Index of BSE and the 50-scrip Nifty of NSE are virtually hitting new highs every week ignoring the concern being raised by participants over likely introduction of long-term capital gain tax or LTCGT on equity, the desirability of which was first spoken of by the Prime Minister, Mr Narendra Modi, about 18 months ago while inaugurating an event by the Securities and Exchange Board of India or Sebi in Mumbai. It had then stirred a hornet’s nest bringingequity indices down.

Some analysts feel if corporate earnings for Q3 (October-December) meet the market’s expectations, it will be a major trigger for increase in not only the Sensex and the Nifty, but also mid-cap and small cap segments since it would be the first-ever earnings growth by private sector in three years.

Gainers in the BSE benchmark included TCS at Rs 2,805, up 3.56 per cent; Wipro at Rs 325, up 2.33 per cent; Coal India at Rs 308.80, up 1.56 per cent and Infosys Rs 1,050.10, up 0.85 per cent.