Page 39 - The Indian EYE 091523

BUSINESS EYE SEPTEMBER 15, 2023 | The Indian Eye 39

Are rising stocks of small and mid-cap

Indians shares a sign of overheating?

The rupee depreciates settles 9 paise lower at its lifetime low of 83.22 against the US dollar on

Thursday amid a firm American currency and elevated crude oil prices

OUR BUREAU
Mumbai/New York
n a major boost to Indian economy, the equi-
ty benchmark Sensex climbed over 385 points
Ito reclaim the 66,000-mark on Thursday, pro-
pelled by robust buying in index majors HDFC
Bank, L&T and SBI amid a weak trend in global
equities. A decline in crude oil prices in the inter-
national market also supported the domestic equi-
ties, traders said.
Rising for the fifth straight day, the BSE Sen-
sex recovered all the early lost ground and final-
ly closed with a gain of 385.04 points or 0.58 per
cent at 66,265.56. During the day, it hit a low of
65,672.34 and a high of 66,296.90. The Nifty ad-
vanced 116 points or 0.59 per cent to settle at
19,727.05.
But the rally in Indian equities that has
swelled the market’s total valuation by $775 billion
in a little more than five months has been accom-
panied by a notable shift in investor preference to
smaller stocks. That poses risks as gauges of small
and mid-cap shares show signs of overheating, and
as the domestic economic outlook becomes more
clouded ahead of national elections next year.
Smaller companies are seen benefiting more
from the ongoing recovery in India’s capital ex-
penditure. Larger stocks, in contrast, have been
relatively restrained by worry over the impact of a The rally in Indian equities has swelled the market’s total valuation by $775 billion in a little more than five months (ANI)
possible global recession on the nation’s major IT
firms, according to a Bloomberg report. ative to large caps has raised caution about the currency had closed at the same level of 83.13 on
The trend is the opposite to what has been near-term outlook for the latest uptrend in Indi- August 21.
seen in the US stock market, which has been driv- an stocks. The domestic unit has declined 60 paise since
en by a handful of technology megacaps surging In a worrisome trend, the rupee depreciated Monday when it had closed 9 paise lower at 82.71
on the boom in artificial intelligence, leaving small for the fourth straight day and settled 9 paise low- against the greenback. On Tuesday, the unit had
caps in the dust. er at its lifetime low of 83.22 (provisional) against plunged 33 paise, the sharpest fall this week.
The Nifty Midcap 100 Index has risen 37% the US dollar on Thursday amid a firm American “We expect rupee to trade with a negative bias
from a March low, compared with a 16% gain currency and elevated crude oil prices. on strong dollar and elevated crude oil prices. Dis-
in the blue-chip NSE Nifty 50 Index, driving the Positive trend in the domestic equity mar- appointing European data may further support
ratio of the former to the latter to an all-time kets, however, provided a cushion to the rupee, dollar. Rising US treasury yields and concerns
high. The previous such peak in early 2018 was according to forex traders. over global economic growth may also weigh on
followed by a drop of about 25% in the midcap Crude oil breached the USD 90 per bar- rupee,” Anuj Choudhary - Research Analyst at
gauge over the next nine months, according to rel-mark after oil producing countries agreed to Sharekhan by BNP Paribas, said.
data compiled by Bloomberg. extend supply cut till December this year while Meanwhile, the dollar index, which gauges the
Investors are still looking to bet on one of the dollar stayed firm on safe-haven demand.At the greenback’s strength against a basket of six curren-
world’s fastest growing economies, driving the interbank foreign exchange, the domestic unit cies, rose by 0.09 per cent to 104.95. Brent crude
Southeast Asian nation’s equity benchmarks to a opened at 83.15 against the dollar and traded in futures, the global oil benchmark, was trading 0.39
series of record highs over the past two decades. the range of 83.12 to 83.22 against the greenback. per cent lower at USD 90.25 per barrel.
And the shift in leadership away from the biggest It ended at the lowest level of 83.22 (provisional) On the domestic equity market front, the
names has been fueled by a flood of funds from against the dollar, registering a fall of 9 paise from BSE Sensex closed 385.04 points or 0.58 per cent
retail investors, indicating broader participation its previous close. higher at 66,265.56 points while the broader Nif-
in the market. On Wednesday, the rupee settled 9 paise low- ty jumped 116 points or 0.59 per cent to end at
Still, the pace of gains in smaller stocks rel- er at 83.13 against the dollar. Earlier, the Indian 19,727.05 points.

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