Stock Market: Equity rout continues, market valuation sinks to 7-month low

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By S Jha

New Delhi, February 27: The Adani-induced equity market rout continued for seventh trading day in a row on Monday. The banking stocks rebounded from oversold positions to shield the indices from steep fall on Monday.

The equity market rout is also induced by heavy selling by the foreign institutional investors, who sold a net of over Rs 2000 crores in the cash market. In three consecutive trading sessions, the FIIs have dumped over Rs 500 crores. They have thus almost erased the infusion in the equity market before Adani rout spread over to the broader market.

The valuations of the BSE-listed companies have also touched a seven month low. This shows the intensity of the rout in the equity market, which has wiped out almost three-fourth of the market valuations of the Adani Group of companies. Adani Enterprises once again led the rout in the group companies, as several of its scrips remained locked in the lower circuit amid unabated dumping of the shares by investors.

However, the banking stocks showed signs of strength. Kotak Mahindra Bank, which has been seen to be the most bearish script, gained strongly to lead a fightback by the Bank Nifty against the overwhelming selloff. State Bank of India, while reacting to positive commentaries of the fund houses, also firmed up. Soo, ICICI Bank spurted to turnaround Bank Nifty, which broke ranks with the broader market to post a healthy gain of almost 400 points.

Axis Bank, which will be completing the acquisition of the credit card business in India of the Citi Bank on March 1 has been staying strong for the last three trading sessions. IndusInd Bank too showed strength in a secular rally in the Bank Nifty. The Bank Nifty is stated to have closed above its immediate resistance level, noted the technical chartists. On previous occasions also, the Bank Nifty has led the turnaround in the broader market, and it’s to be seen if the bulls show fightback. The recovery in the market was also helped by the Dow Jones Futures showing gains. In the afternoon session, Dow Jones was up by over 300 points.

However, Sensex and Nifty remained under stress. But they too recovered from the day’s low, helped by the gains in the banking stocks. The broader market rout intensified further as the metal and the IT sectors joined the bloodbath, with the likes of Infosys, TCS, Tata Steel heavily losing. The selloff is getting strong in the midcap also, with the index heavily losing on Monday.

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