Valuations in broader markets moving into bubble territory, vulnerable to sharp corrections

Retail exuberance is keeping the broader market buoyant, but valuations here are moving into bubble territory, says V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

At high valuations, these segments are vulnerable to sharp correction. Even while remaining invested, investors should exercise caution, he said.

Market is likely to consolidate after the run up in the first half of this month. Positive news flows and buy on dips can keep the market resilient. The strongest tailwind for the market now is the sharp dip in the US bond yield (the 10-year is around 3.95 per cent) triggering large capital flows to emerging markets like India, he added.

Since large cap financials and IT are reasonably valued and have been FII’s favourite sectors, these segments will continue to do well, he said.

Shrey Jain, founder and CEO of SAS Online said fuelled by positive global market sentiments following the Fed indication of a rate cut, the market is poised to sustain its upward trajectory today. The Nifty sustained its positive momentum, driven by robust buying activities in heavyweight stocks, and surpassed the 21,300 mark

BSE Sensex is up 423 points at 70937 on Friday powered by a jump in IT stocks. Tech Mahindra is up 4 per cent, Infosys is up 4 per cent, HCL Tech is up 3 per cent.