Correction and consolidation has been the theme for this market in 2018 so far. Benchmarks have fallen up to 3 percent between January 1 and March 21, driven by multiple factors.
Correction and consolidation has been the theme for this market in 2018 so far. Benchmarks have fallen up to 3 percent between January 1 and March 21, driven by multiple factors.
“The main reasons for this correction are premium valuation and increase in the cost of funds in India & globally. In the meantime introduction of long-term capital gain tax in India impacted the performance of India, which may continue in the short-term,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol in a recent interview.
Barely three months into the year and we already have had about 5 standout sessions on the Sensex, where the index has fallen over 400 points.
The biggest fall was seen on February 2, 2018, when the 30-share index fell over 800 points. Notably, this was a day after Union Budget was presented, which introduced long-term capital gains (LTCG) tax on equity investments as well. This was followed by February 6, 2018 when it fell around 560 points.
Data also reveals there have been around 28 stocks in the BSE universe that have fallen at least 2 percent every time the Sensex has fallen over 400 points this year. Just a day after the Budget, a stock such as Sybly Industries fell around 10 percent, while Gujarat Terce Labs and LEEL Electricals fell close to 3 percent.
On February 6, maximum fall was noticed in Vaswani Industries, declining over 8 percent, while Star Paper Mills fell close to 8 percent.
The current month too has witnessed similar trends, with Riga Sugar Company topping the charts here. The stock fell about 9 percent when the Sensex fell over 500 points.
Is there more pain in store for the market?
“The pain may not be over for Indian market which has already corrected by nearly 10 percent from its all-time high recorded earlier in the month of January and see a further 10 percent slide in the year 2018,” Raamdeo Agrawal, joint MD at Motilal Oswal Financial Services said in an interview with CNBC-TV18 last week.
(With inputs from Ritesh Presswala)