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Indian Stocks Pause Rally Amid Profit-Taking
7 Jan
Summary
- Indian equities declined for the second consecutive day due to profit-booking.
- Technical indicators showed overbought signals, prompting a market pause.
- Geopolitical concerns and large-cap stock declines also impacted sentiment.
Indian stock markets saw a dip for the second consecutive day on Tuesday, primarily driven by profit-booking among investors. Technical indicators flashing overbought signals on daily charts suggested a need for consolidation. Geopolitical concerns and a notable decline in index heavyweights such as Reliance Industries and HDFC Bank further weighed on market sentiment.
Despite the recent downturn, analysts anticipate this to be a temporary pause in the broader uptrend. They point to accelerating earnings growth, potential government focus on capital expenditure in the upcoming Union Budget, attractive valuations, and reduced selling by foreign institutional investors as key factors supporting a continued market rally in the short term.
The broader market also mirrored the trend, with midcap and smallcap indices softening. While Nifty Pharma and Healthcare sectors emerged as top gainers, the overall market breadth indicated a cautious approach, with more stocks declining than advancing on the BSE.
