Mid-day Mood- Nifty tests 22,100 on the downside with broader markets falling for a third day, The ITC block deal rub-off failed to clear the sentiment and markets are now sharply lower with the selloff in the broader market continuing for a third session due to concerns over valuations.

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 a huge 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.

The broader market underperformed the benchmark indices, with the BSE midcap down 2.6 percent and the BSE smallcap down 3.6 percent at 11:45 am. 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.

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 large-caps," Vijayakumar added 10 Adani group companies traded with losses between 5-10 percent on March 13 as they shed over Rs. 90,000 crore market cap so far in today’s session. Shares of Adani Enterprises Ltd, the flagship company of Adani group, fell for the seventh session in a row and was down more than 6 percent at 12.17 am.

Sectoral Trends

Barring Nifty FMCG, all sectors traded in the negative territory amid a broad-based selloff. Nifty Metal, Nifty Realty, and Nifty Media were the worst hit as they fell over 4 percent each.

Fundamental View

In the near-term investors should focus on the sustained weakness in the broader market, particularly the Smallcap segment, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Technical View

The zone of 22,250-22,300 was crucial for the Nifty 50 and provided huge support to the index. Now that these levels have been breached, Nifty 50 can once again see the levels of 22,000, said Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy. On the upside, 22,400-22,450 is the supply zone, Gupta said.

Key Nifty gainers

ITC, ICICI Bank, Kotak Mahindra Bank, Bajaj Finance

Key Nifty losers

Adani Enterprises, Power Grid Corp, Adani Ports, NTPC, Coal India

Key Sensex gainers

ITC, ICICI Bank, Kotak Mahindra Bank, Nestle

Key Sensex losers

Power Grid Corp, NTPC, Tata Steel, Titan Co, L&T

Stock moves

Adani Enterprises: The sell-off in Adani Group intensified, with stocks falling up to 13 percent in a weak market. All 10 Adani counters traded in the red, erasing around Rs 90,000 crore off their combined market capitalization by noon.

ITC: The stock jumped 8 percent following the 3.5 percent stake sale by its top shareholder British American Tobacco.