Indian stocks extend losses on profit booking

Indian stock indices continued to trade in the red on Wednesday, extending losses for the third session of 2024, primarily attributable to dragged profit booking after a stellar cumulative performance in 2023. High valuations, too, are a concern.Benchmark indices – Sensex and Nifty — were 0.4-0.5 per cent lower from the previous session, at the time of filing this report.

Cumulatively, the past 12 months have been stellar for investors who parked their money in Indian stocks. Though there has been some turbulence, first during the Adani-Hindenburg episode and lately during the initial days of the Israel-Hamas war, the calendar year 2023 gave handsome monetary dividends to stock market investors.In 2023, Sensex and Nifty gained 18-19 per cent, on a cumulative basis. The indices had gained a mere 3-4 per cent in 2022. Foreign Portfolio Investors (FPIs) have trained their sight toward India, becoming net buyers in the country’s stock market in the calendar year 2023.

Firm GDP growth forecast, inflation at manageable levels, political stability at the central government level, and signs that the central banks world over are done with their monetary policy tightening have painted a bright picture for India.Going ahead into the week, the key triggers for the markets in the first week of the new year include S&P Global Manufacturing PMI and Services PMI due on Wednesday and Friday, respectively.

On the macroeconomic front, the US Federal Reserve will release the minutes of the latest monetary policy meeting on Thursday.”Market has turned highly volatile with profit booking triggered by high valuations. Even DIIs who have been consistent buyers are booking profits. Buying on dips also is happening simultaneously. These twin moves of profit booking and dip buying will keep the market highly volatile in the near-term,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“An important trend in the market is the renewed buying in pharmaceuticals. Further buying can be expected in this segment.”The Supreme Court judgement on the Adani- Hindenberg issue expected today will have a sentimental impact on the Adani stocks in particular and the overall market in general.