Markets continue to remain muted in the morning session on back of selling pressure in broader market and realty stocks. The Sensex has risen 33 points, 20,025 and the Nifty has gained only 2 points to 6023.
Analysts expect the markets to remain subdued going forward on account of streteched valuations and primary markets attracting more funds. Anand Tandon, Director Equities from BRICS Securities said, "valuations for the current year continue to remain stretched and a P/E valuation of 19x for current year forward, is higher than what it should be." Further, in an environment where real interest rates are going up, fund flows are becoming weak and IPO markets are getting strong, he added. Anand Tandon does not see another rally in the markets for the next three or four months.
Investors are booking profit in realty shares which had risen sharply on back of bargain hunting. Ackruti City (down 13.8%), Orbit Coporation (down 4.2%) and Anant Raj Industries (down 5.1%) have been the top losers from this space.
BSE midcap index and smallcap index have slipped over 0.4% and 0.6%. Several stocks have witnessed selling pressure: Ackruti City (down 14%), Welspun Corporation (down 17%) from midcap space and Murli Industries (17%) from smallcap space have hit lower circuit after after Sebi barred these firms for rigging stocks.
Asian markets have been trading flat in the morning session shrugging of solid closing on Wall Street. Hong Kong's Heng Seng rises marginally in early trade, China's Shanghai Composite has fallen 0.5%. Japan's Nikkei has also turned negative, down 0.1% in the morning session led by exporters. Straits Times has edged up 0.1%, Seoul Composite has risen 0.1% and Taiwan Weighted has added 0.6%.
In India, IT index is leading the sectoral pack, Mphasis has risen 2.8%, TCS has climbed 1.5% and HCL Tech has expanded 1.3%. Analysts recommend investing in stocks geared to weaken rupee currency. Tandon said, "frontline IT is priced to perfection. Smaller companies like Mphasis after the recent drop may not be a bad place to look at." Tandon recommend investors to try and find the stocks rather than take broad sector calls.
Among individual stocks, State Bank of India has fallen 1% after it said that it is planning to launch a rights issue in January-March. Religare has gained 1% after reports of a deal to buy majority stake in Landmark Partners, US based firm.
DLF (down 1.6%) and Sterlite (down 1.5%) ITC (down 1.4%) are the top losers on Sensex. ITC has slumped on reports that production has been stopped in cigarette manufacturing units.
Gainers on the Sensex are Bharti Airtel (up 2.2%), Cipla (up 2%) and Wipro (up 1.5%).
