Sensex Rises on Day of All-Round Selling: Is Now the Time to Book Profits and Exit Indian Markets

by: Wisdomsmith

This is beginning to resemble the heady days of late 2007 or even the Jan. - Mar. 2000 phase, when headline indices ran up day in and day out, with or without provocation. Operators are truly, well in control of this market.

It certainly does not feel like your average trading day when the two leading indices close just above their crucial levels, even in spite of the all around selling in larger markets. The Sensex gained exactly to 95 or so points it needed to breach 20K, ending at 20,001.55, after repeatedly trading around the 20K mark. The Nifty ended at 6009.05.

It seems only a few scrips propped the headline indices, as most other broad market indices were down. BSE Midcap index was down a sharp 1% while the Smallcap index was down 1.3%. Advance decline was steeply negative, with only one in four scrips traded rising.

In the Nifty, 28 of the 50 scrips ended down. The top gainer was Ranbaxy (OTC:RBXLF) (+5.9%). Several IT scrips gained, led by TCS (+4.9%), Wipro (NYSE:WIT) (+3.8%), Infosys (NASDAQ:INFY) (+1.8%). Sun Pharma (+3.3%), Cipla (+1.7%) indicated pharma stocks were also in favor.

Junior Nifty was down 0.4%. Only 15 of the 50 scrips in Junior Nifty gained, led by tech and pharma scrips again. Mphasis (+2.7%), Tech M (+1.8%), Glaxo (+1.7%), Dr Reddy (+1.4%) were some key gainers.

Only 8 of the 50 scrips in Nifty Midcap 50 gained. The index was down 0.9%. IVRCL Infra was the top gained 3.4%, infra stocks are in some demand these days, given that they have underperformed this rally. IVRCL is down about 5% for the year.

FIIs it seems are pouring in money, though why they would want to buy fully valued large caps beats our understanding. Today it seems FIIs bought about $500mn worth of stock. In September so far FIIs have poured in almost $3.5bn worth.

We advise investors to book profits and exit all fully priced scrips. Investors can expect sharp volatility going forward.

Disclosure: No positions