An evening walk down D-St: Bulls lose control as FIIs cut their shopping spree

Bears dominated D-Street on June 12 largely affected by weak global cues and some profit taking as the index was trading in a narrow range in the last three trading sessions.

Absence of fresh triggers, fall in foreign liquidity and high valuations were among some of the other factors that weighed on sentiment, suggest experts.

Foreign investors, after pouring more than Rs 3000 crore in Indian markets on June 3 when Nifty scaled its all-time high of 12,103, have turned net sellers since then to the tune of Rs 2000 crore, SEBI data showed.

Nifty managed to hold on to 11,900 while the S&P BSE Sensex dropped nearly 200 points. The broader market underperformed – the S&P BSE Midcap index fell 0.79 percent while the S&P BSE Smallcap index closed 0.48 percent lower.

The final tally on D-Street – the S&P BSE Sensex dropped 193 points to 39,756 while the Nifty50 closed 59 points to close at 11,906.

Except metal that gained 0.5 percent, all the other sectors witnessed selling pressure with realty, auto and capital goods being the top losers in the range of 1.2 to 1.9 percent.

On charts, Nifty broke below 5-day exponential moving average (EMA) but bounced back from 13-day EMA placed at 11,876.

“Market is falling on its own weight, given that there are no triggers or news for the markets to get any direction and therefore now valuation is what is weighing the bourses,” Umesh Mehta, Head of Research, Samco Securities told Moneycontrol.

“Nifty is trading at a P/E multiple 29x, which is the highest in decades. Statistically, this high valuation sustains for less than 5 percent of the time in a bull cycle. FIIs too have scaled down their purchases,” he said.

Mehta further added that all these factors along with negative international news took the bourses down and across the board selling was witnessed in the market. A post-election range of 11,600-11,400 looks reasonable for Nifty.

Stocks in news:

Anil Ambani-led Reliance Capital and Reliance Home Finance said Price Waterhouse & Co Chartered Accountants (PWC) has resigned as statutory auditor of both the companies. Reliance Capital closed 6.8 percent lower while Reliance Home Finance dropped 4.2 percent.

Shares of Dewan Housing Finance Corporation rallied nearly 4 percent on June 12 after the company paid Rs 961 crore interest on non-convertible debentures (NCDs).

Indiabulls Housing Finance fell nearly 8 percent after the company said it moved to Supreme Court seeking an urgent listing of a plea filed against it in which it has been alleged that the company misappropriated Rs 98,000 crore of public money. The fall was in addition to 8 percent cut seen in the previous session.

Simplex Infrastructures shares plunged 7 percent after rating agency CARE revised its outlook on the company's bank facilities to negative from stable.

Maruti Suzuki India shares fell over 2 percent after global brokerage house Deutsche Bank maintains its 'hold' rating but slashed price target to Rs 6,325 (from Rs 6,450 earlier), implying 9 percent potential downside from current levels.

Motherson Sumi Systems shares gained more than 3 percent after Credit Suisse retaining its positive stance on the stock, citing attractive valuations and expected growth going ahead.

Global update:

Asian market ended lower on June 12 on the back of overnight decline registered by the US markets. Shanghai Composite declined 0.56 percent at 2,909.38, Nikkei was down 0.35 percent at 21,129.72 and Kospi shed 0.14 percent at 2,108.75