Key benchmark indices bounced back in trades on Thursday led by gains in index heavyweights Bharti Airtel, Larsen & Toubro and IT shares.
From a low of 72,497, the S&P BSE Sensex rebounded into the positive zone and rallied to a high of 73,364. The BSE benchmark eventually ended the day with a gain of 335 points at 73,097.
The NSE Nifty 50 hit a low of 21,918, and a high of 22,205, before settling 149 points up at 22,147.
Stock Market View | Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services
The lesson from market history is that frothy valuations are unsustainable. Therefore, the blood bath in the broader market which happened yesterday is hardly surprising to sane minds in the industry.
Investors should appreciate the following facts.
The Nifty Smallcap index is down 13.5% and the midcap index is down 6.8% from their respective peaks. But Nifty is stable with a minor cut of only 2.1%.
There is room for the broader market to correct more since the valuations continue to be elevated.
Investors should now focus on largecaps and quality midcaps. The turbulence in the market will give cherry picking opportunities.
From now on irrational exuberance will take a back seat and rational valuations and quality will be the driving force. This turbulence will separate the men from the boys. High quality private sector banks and the leading names in capital goods, telecom and autos can be accumulated in a calibrated manner.
Global Cues
Tokyo stocks opened lower Thursday, tracking falls on Wall Street, where investors were eyeing key upcoming economic indicators.The benchmark Nikkei 225 index dropped 0.52 percent, or 201.57 points, to 38,494.40 in early trade, while the broader Topix index also fell 0.24 percent, or 6.40 points, to 2,641.11.
The S&P 500 and Nasdaq edged lower on Wednesday as investors took profits in chipmaker stocks, while they braced for producer price data and further clues on the inflation trend ahead of next week’s Federal Reserve meeting.
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