MUMBAI: Benchmark equity indices ended lower for the second successive session today as sentiment among investors was soured by the sell-off in several big winners of the year.
Profit booking was the name of the game, led by retail investors and some high net-worth individuals, triggered by the collapse in shares like Indian Railway Catering and Transportation Corporation and others.
The Nifty50 index closed 0.8 per cent lower at 18,266.60 points, while the BSE-Sensex ended at 61,259.96 points, down 0.7 per cent.
In the two-day sell-off, investors’ notional wealth has fallen by as much as Rs 6.6 lakh crore. Today alone, investors’ notional wealth reduced by Rs 3.3 lakh crore.
The selling was more prominent in the broader market with the Nifty Midcap 100 and Nifty Smallcap 100 index ending lower by 2 per cent each as retail investors rushed to book profits fearing further correction.
The fear was palpable on the Street as the volatility gauge India VIX surged for the third consecutive session. India VIX ended higher by 5 per cent and is now up close to 15 per cent for the week, as traders rush to buy put options in anticipation of further selling pressure in the market.
The sell-off in the market came as UBS Securities India became among the first prominent broking firms to downgrade Indian equities to “underweight” from “overweight” earlier citing “expensive valuations”.
“India, like Taiwan, looks very poor on our scorecard framework. The relative valuation of India to ASEAN, two areas with similar growth dynamics and occasional perceived macro vulnerabilities, looks too wide to justify,” the brokerage firm said in a note.
Sectors with heavy retail presence such as metals, real estate, pharma and PSUs saw the highest selling. The Nifty Pharma, Nifty Realty, Nifty Metals, and Nifty CPSE index closed 1.4-2.2 per cent lower on the day.
Heavyweights such as Reliance Industries, Infosys and HDFC Bank also saw profit booking in the session after strong gains in recent weeks.
Shares of IRCTC collapsed another 17 per cent taking its correction from the record highs hit yesterday to close to 40 per cent in two days as investors rushed to exit the stock fearing further correction.
“Investor greed is a bigger problem. They think that there is only one asset class called equity and there is nothing called risk and that is the bigger problem rather than anything else in the macro or business cycle from an India point of view,” S Naren, chief investment officer at ICICI Prudential AMC told ET Now.
Overall the breadth of the market was extremely negative as three stocks fell for every one stock that rose on the National Stock Exchange.
