More Stories

Informist, Monday, Jul 15, 2024

By Anshul Choudhary

MUMBAI – The Nifty 50 continued to touch fresh highs and crossed the 24600 point mark for the first time today. The index also closed at its highest level yet. Investors appear to be ignoring warnings of muted earnings growth in Apr-Jun and keeping their focus on the upcoming Union Budget for 2024-25 (Apr-Mar), with the government expected to announce populist measures to boost consumption, analysts said.

The benchmark indices rose despite expectations of poor earnings growth for Indian corporations in the June quarter. According to a poll by Informist, the cumulative net profit of Nifty 50 constituents for the quarter may grow 5% on year, lower than the growth seen in 2023-24 (Apr-Mar). "Greed is driving market sentiments, and it will be difficult for most people in the market to justify current levels," the head of equities at a domestic brokerage said.

The analyst said expectations around the Budget could partly explain the rally. "There are expectations of populist measures (in the Budget), considering the Maharashtra elections are around the corner... we may see higher deductions in tax," the analyst said.

The Nifty 50 reached a new intraday high of 24635.05 points. It later came off the peak slightly, but still closed 0.4% higher at 24586.70 points. The BSE Sensex closed 0.2% higher at 80664.86 points, its highest closing level yet. Select stocks from the financial, energy, automobile, and pharmaceutical sectors helped the benchmark indices end higher, while profit taking in information technology stocks limited gains.

Apart from expectations around the Budget, there are expectations that the long-term earnings growth prospects of Indian corporations remains intact. Analysts said earnings are likely to improve as the monsoon is turning out to be normal, which is likely to boost income levels, especially in rural India. Moreover, capital expenditure by the government after the Budget is expected to provide a further boost to earnings. Several experts expect the net profit of Nifty 50 companies in 2024-25 (Apr-Mar) to rise 14-15%, while some are conservative and expect growth to stop at 10-11%.

Shares of State Bank of India rose over 2.5% as public-sector bank stocks were in focus again after being stuck in a range in June and so far this month. The Nifty PSU Bank rose over 3% today, with gains in Indian Overseas Bank, Bank of Maharashtra, and Punjab & Sind Bank. Shares of Bank of Maharashtra extended gains and closed 5.6% higher after its net profit in Apr-Jun rose to 12.93 bln rupees from 8.82 bln rupees a year ago. 

Among large-cap stocks, shares of Oil And Natural Gas Corp rose over 5%. The stock has risen nearly 18% this month owing to its reasonable valuations. The stock has given only 17% returns in the last 10 years.

Shares of SBI Life Insurance Co and Shriram Finance rose over 3% each, and those of Bajaj Auto gained 2.6%. Among other top gainers, shares of NTPC rose 2.3% after staying in range for about a month. 

Shares of information technology stocks started the session on a positive note with HCL Technologies rising nearly 5% before investors started taking out their profits. Shares of HCL Technologies finally ended the session 0.6% higher.

Multiple brokerages have raised the target price for the stock after its June quarter earnings. During the quarter, the consolidated net profit of HCL Technologies rose 6.8% on quarter to 42.57 bln rupees, while the consolidated revenue fell 1.6% to 280.57 bln rupees. This was either in line with expectations or above the view of some brokerages, but all of them liked that the company kept its revenue growth guidance for 2024-25 unchanged at 3-5%.

"HCLT's (HCL Tech's) sharp re-rating has been driven by higher growth than peers and rectification of its capital allocation policy--fundamentals that shall sustain in FY25 too," Nuvama Institutional Equities said. The brokerage raised its target price for the company to 1,800 rupees from 1,700 rupees and maintained a 'buy' rating.

Nirmal Bang Institutional Equities expects better growth for HCL Technologies in the second half of this financial year and believes the company may end the year at the higher end of its guidance. The company's revenue was above Nirmal Bang's estimates, which pushed it to raise the target price to 1,888 rupees and upgrade the rating to 'buy'.

Among other IT stocks, shares of LTIMindtree fell 1.7% and those of Tech Mahindra were down 0.4% after having risen 3% each on Friday. The Nifty IT was the only sectoral index to fall today, losing 0.3%, while the Nifty PSU Bank and Nifty Oil & Gas rose 3.1% and 2%, respectively.

The broader market performed better than the benchmark indices. The mid-cap indices rose 0.7-0.9% and the small-cap indices gained 0.4-0.6%. Among mid-cap stocks, IDBI Bank was the top gainer, rising 6.4%, while shares of Sundaram Finance fell 4.5%.

Among others, shares of Tanla Platforms ended nearly 5% higher after The Economic Times reported that the company signed a deal with Meta-owned WhatsApp to identify fraudulent phone numbers in an attempt to boost efforts at controlling scams over the messaging platform. Shares of SpiceJet on BSE rose nearly 8% ahead of the airline's Oct-Dec and Jan-Mar earnings, scheduled for release today.

Shares of Simbhaoli Sugars ended at its 5% lower circuit of 30.36 rupees after the National Company Law Tribunal ordered initiation of insolvency resolution proceedings against the company on a petition filed in September 2018.

* Of the Nifty 50 stocks, 34 rose, and 16 fell

* Of the Sensex stocks, 18 rose and 12 fell

* On the NSE, 1,499 stocks rose, 1,254 fell, and 82 were unchanged

* On the BSE, 2,036 stocks rose, 2,004 fell, and 128 were unchanged

* Nifty PSU Bank: up 3.1%; Nifty Oil & Gas: up 2%; Nifty IT: down 0.3%

BSE                                               NSE
Sensex: 80664.86, up 145.52 pts or 0.2%           Nifty 50: 24586.70, up 84.55 pts or 0.4%        

End

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.