Wednesday saw a sharp decline in Indian stock indices as traders followed negative cues from overnight US markets. The Sensex and Nifty were almost 1% lower than where they had closed the previous day when this report was being written. All of the Nifty sectoral indices were down, with the most significant declines occurring in the Nifty auto, Nifty metal, Nifty PSU bank, and Nifty private bank.
Coming to specific stocks, NTPC, Hero Motocorp, Tata Steel, Tata Motors, and BPCL were the top five losers among the Nifty 50 group, while Divis Labs, Nestle India, Hindustan Unilever, Asian Paints, and HDFC Life were among the top gainers.
The Indian stock indices reached new highs almost two weeks ago, and the benchmark Sensex broke through 67,000 for the first time. The latest bull run in Indian stocks was fueled by a steady influx of foreign portfolio funds (net buyers in Indian stock markets for the fifth straight month), a strong economic outlook, strong global markets, and a relatively moderating inflation rate.
But over the past few sessions, there has been a consistent but steady decline in both indices, which can be partly attributed to investors taking profits out of their positions due to concerns over exorbitant stock valuations that analysts have raised.