As the curtain closes on an exceptional year for domestic equities, the Indian market stands poised near record highs. Retail exuberance remains high, fueled by dovish bets on the Federal Reserve. However, December 29 witnessed mild profit-booking in the first half of trading, offering a brief pause after record highs were achieved in the previous session.
The benchmark indices, BSE Sensex and NSE Nifty 50, dipped modestly at opening bell. Sensex shed 188 points (0.2%) to settle at 72,222, while Nifty lost 53 points (0.2%) to touch 21,725 levels by 10 am.
Despite the morning dip, the year-to-date picture remains vibrant. Nifty 50 is on track to close 2023 with a remarkable 20% gain, while Sensex boasts an impressive 18% surge.
However, market observers advise a cautious approach to the final trading day and beyond. Raja Venkatraman, co-founder of Neotrader, expects further profit-booking on December 29, but underlines the underlying bullish sentiment. He views the dip as a natural market correction after a significant month-long rally.
On the flip side, Sahil Kapoor, head of products and market strategist at DSP Mutual Fund, suggests managing expectations for the new year. He cautions that valuations are at a premium compared to historical averages, with Nifty trading at a 22x price-to-earnings (PE) multiple. This, he predicts, could lead to consolidation or correction in the early months of 2024.
The broader market mirrored the profit-booking sentiment, with both Nifty Midcap 100 and Nifty Smallcap 100 indices down 0.1% within the first hour. Volatility gauge India VIX remained elevated, hovering near its 9-month high.
Sectorally, profit-booking was evident across most indices, except for Nifty Auto and FMCG. Notably, sectors like Oil & Gas, Metal, and PSU Banks, which saw recent gains, experienced the highest declines.
Despite the profit-booking and cautious outlook, the overall market consensus is that investors should embrace dips as buying opportunities due to India's robust underlying economic fundamentals.
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