Below is the View On Daily Market Commentary by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd
“Indian equity markets fell sharply today on the back of weak global cues and profit booking. Investors were also cautious due to rising coronavirus cases and fresh lockdowns in some parts in the country. Nifty ended 195 points lower (-1.8%) to close at 10,607, while Sensex fell 661 points (-1.8%) to close at 36,033. The broader market also corrected with Nifty Midcap 100/Smallcap 100 down -1.1%/-1.5%. All the sectors ended in red except Pharma which was up 0.5%. Banks (-3.2%), Financial Services (-2.5%), Auto (-2.4%) and Metals (-2.5%) were the biggest losers. The Auto index was down at its lowest level since January 2019, after SIAM report said auto sales for June nearly halved from a year ago and would take another few years to reach 2018 levels. India VIX rose 5.7% to 26.7 levels. Global cues were weak as markets are worried over the rising virus cases, new lockdowns and flaring US-China tensions.
Even domestic sentiments were weak on the back of continuous rise in cases in India and announcement of fresh lockdowns once again. Further the June quarter earnings season started last week, which is expected to be a complete washout. Management commentary would be keenly watched out for which could keep the markets volatile in the near term. The market valuations have also become expensive at this level. Nifty is now trading at forward P/E of 20x, 14% premium to LPA. Even technically, Nifty has broken its rising support trend line and could continue to decline towards 10500-10450 zones. We would advise traders to stay cautious, while investors should be more defensive in their portfolio approach.”