MUMBAI: After the recent shot at outperformance, the broader market on Friday was at the center of an intense and surprising sell-off in the Indian markets. While the Nifty50 index slumped 1.5 per cent, the Nifty Midcap 100 and Nifty Smallcap 100 index were graced with over 2 per cent fall each.
The selling was likely led by panicking retail investors who are now concerned with the buy-on-dip strategy that had been their friend for the last year or so. The rising threat from the Omicron variant of the coronavirus, tightening global liquidity conditions, and sectoral churn in the space is testing investors’ patience.
The Nifty Midcap 100 index is now in the correction territory having fallen 10 per cent from its record high in October and is likely to be joined by the Nifty Smallcap 100 index soon, which is down nearly 9 per cent from its recent high.
According to fund managers, the coming weeks and months will be defined by how nimble investors can be and whether they can detach themselves from stocks that have so far given them a thrilling ride.
Good news from abroad
For the information technology companies, there was good news from abroad today after Accenture sharply lifted its guidance for 2021-22 to 19-22 per cent, underscoring the boom time that the global IT industry is undergoing.
Concerns over valuations were put aside as investors boarded the IT bandwagon and helped the Nifty IT index rise 1.4 per cent for the day. For the second successive session, information technology stocks were an oasis amid a sea of red on Dalal Street.
Accenture’s strong earnings and guidance means investors can be rest assured of another quarter of blockbuster earnings for IT companies.
Good old profit-booking
Shares of Zee Entertainment Enterprises, one of the hottest stocks on the Street in the past few months, succumbed to some pre-event anxiety today.
The company is reaching a deadline to turn the non-binding offer from Sony India for a merger into a binding one on Tuesday. And investors anxious over the lack of news so far, sought to book some profit given the staggering rise it has seen since the deal was first announced in September.
Shares of the company had risen 32 per cent since the announcement of the merger, and therefore were susceptible to some classic ‘buy the rumour, sell the news’ trade by investors. The stock closed nearly 7 per cent lower today.
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