Mid-day Mood | Nifty tests 22,100 on the downside with broader markets falling for a third day

Benchmark indices Sensex and Nifty50 extended losses to slip to the day's low on March 13, with early gains fading away and the index slipping near the 22,100 level. Sensex was weighed down by heavyweights Reliance and L&T offsetting gains in ITC shares after huge the block deal this morning. The selloff in the broader market underscored a declining trend for a third session as some market voices expressed concerns over high valuations.

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The broader market underperformed the benchmark indices, with BSE midcap down 2.6 percent and BSE smallcap down 3.6 percent at 11:45am. Around noon, the Sensex was down over 470 points or 0.6 percent, and the Nifty 50 was down close to 200 points or 0.9 percent. About 404 shares advanced, 2,891 shares declined, and 44 shares were unchanged.

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The excessive valuations in the mid and smallcap segments driven by an irrational exuberance of retail investors has been a concern for many months now, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. "It has taken a strong message from the regulator SEBI to trigger a correction in the Nifty Smallcap index by 10% from the February 8th peak," Vijayakumar added.

396 stocks hit a lower circuit indicating there is more pain to come in this segment, Vijayakumar said. The actions from mutual funds also indicate excessive valuations in the broader market. "The net impact of this shift would be more money flowing into largecaps," Vijayakumar added.

(This is a developing story, please come back for more.)

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