Benchmark stock market indices fell on Friday in early trade after witnessing a rally in the previous session. IT, pharma, and banking stocks dragged the indices lower.
The S&P BSE Sensex lost 452.52 points to 79,491.29, while the NSE Nifty50 was down by 93.25 points to 24,095.40 as of 9:42 AM. Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that the uncanny ability of the market to surprise was evident in yesterday’s massive 445 point rally in Nifty.
“Even though FII buying helped in the rally, at Rs 1506 crores net buying it was not good enough to trigger such a massive 1.8% rally in Nifty. Short covering in certain beaten down fundamentally strong stocks like the Bajaj Twins and sharp spurts in auto stocks assisted by better-than-expected December sales numbers have contributed to the rally. Largecaps outperforming smallcaps is a positive signal and may continue,” he added.
However, it is too early to conclude that FIIs will continue to buy. With dollar index at 109.25 and the U.S. 10-year yield at 4.56% the macro construct is not favourable for sustained FII buying. Impressive pick up in deposit growth augurs well for banking stocks which are fairly priced.