The benchmark Sensex on Tuesday lost 379 points as investor sentiment remained subdued amid concerns over rich valuations after the sharp rally in stocks in recent weeks.

The 30-share gauge ended at 71892.48, marking a drop of 379.46 points or 0.53 per cent, with 22 of its constituents ending in the red. On the NSE, the broader Nifty recovered from the day’s low of 21555.65 to close at 21665.80, a loss of 76.10 points. Market circles said the sentiment has turned cautious following the big gains seen in stock prices over the last few weeks.

Moreover, rising cases of Covid in the country are adding to investor discomfort, leading them to seek refuge in defensives such as pharma.

The market’s attention will be towards the minutes of the last meeting of the US Federal Open Market Committee on December 12-13.

The minutes will be released on January 4, and investors will watch for cues on interest rate cuts in this calendar year.

After that, the earnings season will commence on January 11 with Infosys declaring its third-quarter numbers.

“The market extended yesterday’s last hour’s sell-off, taking negative cues from Asian peers due to weak Chinese manufacturing data and mounting tensions in the Red Sea, which has the potential to disrupt global trade and crude supplies,” Vinod Nair, head of research at Geojit Financial Services said.

Brokerages upbeat

Equities may have begun the year on a quiet note, but that has not stopped brokerages from putting out bullish forecasts for the domestic markets.

Jefferies said that while global growth is expected to slow in this calendar year, India’s GDP growth will be a strong 7 per cent in 2023-24 and 6.5 per cent in the following fiscal year. It also expects corporate earnings growth to be strong at 15 per cent in 2023-24 and 2024-25.

Citi was cautious on the IT pack but expected midcap stocks to do well this year
because of strong domestic flows.