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A flood of initial public offers (IPOs) has also impacted the market as investors have booked profits to subscribe to the new offers.
Sensex and Nifty could decline by another 5-10%, said 60% of those polled. Banks, IT and real estate were the top sectoral picks amid the decline. Stock-wise, HDFC Bank was the most common choice. There was an even split on the outlook for the Nifty, which closed at 17,671.65 on Friday – 33% expected it at 17,000 by the end of this year; a similar number saw it at 18,000. About 60% of those polled said investors should reduce portfolio allocation to equities as stock valuations look rich after the near-vertical surge in the market since late March 2020.
IPO Rush in Nov
Half of those surveyed recommended a 60:40 allocation to equity and fixed income. Only a fifth of those polled voted in favour of an aggressive 80% allocation to stocks.
“This is a fair value market and we have an equal weight on equities,” said Nilesh Shah, managing director, Kotak Mahindra Asset Management Co. “The long-term growth story is intact but one should be equal-weight – neither underweight or overweight.” The Sensex has dropped 4.7% from its high of 62,245.43 on October 19 while the Nifty is down 5% from its peak of 18,604.45 scaled on the same day.
On Friday, foreign portfolio investors sold Indian shares worth ₹5,142.6 crore, taking their total sale for October to ₹18,000 crore – the highest in a month this year.
Money managers said the rush of IPOs in November may also exert pressure on the secondary market.
Nykaa is raising ₹5,352 crore through its IPO. PolicyBazaar is coming to the market in November with a ₹1,960 crore IPO. Paytm recently increased its IPO size to ₹18,300 crore from ₹16,600 crore.
“Because of the pressure in the primary market, we may witness some selloff in the secondary market. There is a lot of bunching up of these IPOs and till this rush of IPOs gets absorbed there will be pressure on the secondary market,” said Shankar Sharma, founder, First Global.
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