Overnight fall in Wall Street spread to Asian stock markets on Tuesday morning, giving traders an opportunity to book profit at higher levels. Participants in Dalal Street have been looking for such a chance to unwind their risky positions built over last ten days as part of a pre-Budget rally so that they do not stand to lose significantly if the Budget 2018-19 to be presented on Thursday falls short of market expectations.

Analysts say such risk cannot be underestimated because by all accounts the bull rally not only in India but also elsewhere has been thriving on liquidity gush.

The 30-share Sensitive Index of Bombay Stock Exchange and the 50-scrip Nifty of National Stock Exchange started with negative gap and slipped further in the afternoon as participants sold frontline stocks to book profit.

Simultaneously, investors bought ~ or may have short covered ~ in state-run banks. Big lenders such as State Bank of India, Punjab National Bank, Canara Bank, etc were among gainers.

The Sensex closed at 36,033.73 points, registering a decline of 249.52 points or 0. 69 per cent. The Nifty declined 0.73 per cent or 80.75 points to finish at 11,049.65 points. The Bank Nifty lost 0.83 per cent or 229.40 points to end at 27,269.05 points. In the Sensex pack, 10 shares moved up and 21 were down. For the Nifty, the advance-decline ratio stood at 13 versus 36, while one share remained unchanged.

Analysts say equity market participants appear to have taken due note of advisory issued by capital market regulator the Securities and Exchange Board of India as well as proper analysis about the stock boom in Economic Survey which has asked investors to be circumspect while picking up shares for investment lest they don’t have to rue their mis-judgement later.

The Survey cited 23 per cent rise in the market in the current fiscal (2017-18) so far with two months to go before a new fiscal starts. “Sustaining these valuations will require future growth in the economy and earnings in line with current expectations and require the portfolio re-allocation to be semi-permanent. Otherwise, the possibility of a correction in them cannot be ruled out,” the Survey said.

Survey notes: “The market expectations of earning growth are much higher in India. Indeed, it is such expectations that lie in the origin of the stock market boom. In 2017, signs emerged that prolonged slide in corporate profit-to-GDP ratio might finally be coming to an end. Investors reacted to this with alacrity bidding up share prices in anticipation of a recovery they hoped lay just ahead.”

Analysts corroborate this observation, saying participants go for buying in response to speculations and trim their positions when the factual report pertaining to economic fundamentals hits the market.