Mumbai: The markets dragged in early trade with benchmark indices under severe selling pressure due to weakness in mid-cap companies and public sector banks. The Nifty was below the 9400 mark, down almost 0.6%, while the Sensex lost over 150 points, hovering around 30,400.
Heavy sell-off was seen in mid-cap and small-cap stocks with the BSE Midcap and BSE Smallcap falling over 2% from previous close. Among PSU banks, State Bank of India was down over 1%, with BSE Bankex slipping half a percent.
Ashu Madan, president, equity broking, at Religare Securities Ltd, said that the markets fall is due to selling in mid-caps and PSU banks. “The markets were in a over-bought zone. Generally, whenever the markets correct, mid-caps are the first ones to get hurt. Also, PSU banks were bought in hopes of the non-performing ordinance by the government but now investors have realised it will be long time for these financials to benefit from the move.”
BSE Midcaps and Smallcaps were at record highs in April, gaining 17.6% and 22%, respectively, in 2017.
According to Jimeet Modi, chief executive officer, SAMCO Securities, there is a bit of fatigue and tiredness in the markets after the bumper rally in April and May. “Today’s markets fall is part of the on-going correction that was due. Valuation-wise, mid-caps have run ahead of times and needed a bit of correction. As part of sector allocation, investors are once again buying into large-caps and dumping mid-caps.”
Among sectoral indices, BSE Healthcare was the biggest laggard, down over 3%. Sun Pharma lost 7.9% intraday, hitting 6-month low after its US-based subsidiary Taro Pharmaceutical Industries Ltd announced disappointing January-March quarter results.
According to Reuters, Taro Pharmaceutical Industries reported 25.9% fall in net sales for the March quarter, while gross profit decreased by $80.4 million to $143.8 million. The US arm accounts for about one-fifth of Sun Pharma’s revenue and profit.
Meanwhile, metals, capital goods, oil and gas and realty stocks were also in red.