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Informist, Tuesday, Jul 16, 2024

By Noel John

MUMBAI – Benchmark indices rose to their fresh lifetime highs today, with the Nifty 50 rising 0.3% intraday, but profit booking at higher levels led to muted gains. The Nifty 50 closed 0.1% higher at 24613 points. Investors remained positive on Indian equity markets on optimism ahead of the upcoming Union Budget, a likely above normal monsoon, and as earnings of corporate majors have come in-line with expectations so far. Equity markets are shut on Wednesday on account of Moharram.

Today, the Nifty 50 and the Sensex ended 0.1% higher each at 24613 points and 80716.55 points, respectively--their record closing level. Despite rich valuations, investors continue to pump money into the equity market through mutual funds, which is driving the markets currently, Anita Gandhi, whole time director of Arihant Capital Markets, said.

After a positive opening today, indices moved in a very narrow range till the final hours of trading when investors booked profits from higher levels. This is usually the normal market behaviour during a sideways condition, Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market, said. Shares of Bharti Airtel, select information technology, and fast-moving consumer goods were some of the gainers, while a fall in index-heavyweight Reliance Industries, and select stocks in financials and pharmaceutical sector limited gains in benchmark indices.   

Some analysts see the current rise in the equity market as a "pre-Budget rally". Investors now look forward to the new Narendra Modi-led government's first Budget on Jul 23. While the capital expenditure focus will be maintained, some re-orientation of spending to provide a fillip to sluggish consumption is inevitable, Nirmal Bang Institutional Equities said in its pre-Budget report. For the middle class, brokerage Nirmal Bang expects an increase in the tax exemption limit. For the rural sector, it foresees an increase in transfers under the Pradhan Manthri Kisan Scheme.  

"This time, the government will likely focus on rural infrastructure, as it enhances the rural market's access to urban areas, leading to better economic realisation for the rural economy. The combined focus on both urban and rural infrastructure is expected to drive better growth," Umesh Revankar, executive vice chairman at Shriram Finance, said in a note today. 

If the Budget actually turns out to be a populist one, it will be a huge boost for fast-moving consumer goods and automobile companies, which is also one of the reasons behind the current positive sentiment in these stocks, Gandhi of Arihant Capital Markets said. Shares of FMCG and automobile companies were among the top gainers today.

FMCG stocks have been gaining for over a month as investors expect rural demand to pickup after monsoon season, which is likely to be above normal this time. Shares of Hindustan Unilever, Tata Consumer Products, Britannia Industries, and ITC were among the top gainers in the pack today. Owing to the rise in these shares, the Nifty FMCG index ended the session 1% higher at 60645.15 points--its highest closing level. Sentiments around HUL were positive after its board approved the sale of its water purification business, under 'Pureit' brand, to A O Smith India Water Products. The transaction will be done as a going concern on a slump sale basis for an enterprise value of $72 mln.

Automobile companies also ended the session in green, with Mahindra & Mahindra, Eicher Motors, and Bajaj Auto among the major gainers in the pack. Shares of Bajaj Auto extended gains from this morning after its net profit and revenue for the June quarter beat analysts' estimates. The company's net profit rose over 19% on year in Apr-Jun to 19.88 bln rupees, higher than the average of analysts' estimate at 19.58 bln rupees. The revenue for the quarter also beat expectations, rising nearly 16% on year to 119.28 bln rupees, higher than the average estimate of 117.24 bln rupees.

Shares of energy companies such as Coal India, and Bharat Petroleum Corp were the top gainers on the Nifty 50 index, rising nearly 3% each. Among other energy stocks, Adani Energy Solutions, and Adani Green Energy also ended the session higher. The sentiment around energy stocks was boosted on expectations of more inflows from mutual fund schemes, a market participant said. Today was the final day of ICICI Prudential Energy Opportunities Fund's public subscription. The fund aims to invest in companies engaged in or expected to benefit from the growth in traditional and new energy sectors and allied business activities. Further, brokerage firm PhillipCapital initiated coverage on Coal India with a 'buy' rating, and a target price of 611 rupees, as it believes the company will meet the majority of the country's coal requirements. 

Shares of real estate companies rose, with the Nifty Realty index ending the session 1.7% higher at 1126.25 points. Shares of Sobha Ltd, Sunteck Realty, and Prestige Estates Projects were the top performers in the pack. Brokerage firm Sharekhan also expects the sector to report a strong pre-sales growth in 2024-25 (Apr-Mar) owing to a strong project launch pipeline, while possible interest rate cuts will offer growth tailwinds going ahead, according to a report on Friday.

Shares of Vodafone Idea and Bharti Airtel rose after media reports said the Supreme Court has decided to consider telecom companies' plea related to adjusted gross revenue dues calculation by the telecom department. According to the Department of Telecommunications calculation, telcos owe more than 1 trln rupees to the government in the form of adjusted gross revenue, various media houses reported. Shares of Bharti Airtel closed 2% higher and those of Vodafone Idea ended 0.7% up. 

On the downside, shares of select pharmaceuticals and banking and financial companies saw profit booking throughout the session. Banking stocks have done well in the past couple of weeks, and hence investors are booking profits in space, according to Gandhi of Arihant Capital Markets. However, valuations of pharmaceutical companies still remain expensive even after the correction seen today, she added. Shares of Shriram Finance, Kotak Mahindra Bank, Dr Reddy's Laboratories, Cipla, and Sun Pharmaceutical Industries were among the worst performers today.

The broader market indices ended marginally higher today with the Nifty Smallcap 250 index ending 0.2% higher. Investors now await the earnings of mid-cap and small-cap companies at a time when earnings growth needs to justify expensive valuations in this space.

Shares of SpiceJet rose sharply during the session and ended 3.2% higher at 57.70 rupees after the company reported a consolidated net profit of 1.27 bln rupees in Jan-Mar compared to a net loss of 62.02 mln rupees a year ago. Shares of Century Textile closed nearly 6% higher after its wholly-owned subsidiary, Birla Estates, acquired five acres of land in Gurugram. The land parcel has a development potential of around 1 mln sq ft and is expected to generate revenue of over 14 bln rupees.

* Of the Nifty 50 stocks, 28 rose and 22 fell

* Of the Sensex stocks, 18 rose and 12 fell

* On the NSE, 1,404 stocks rose, 1,286 fell, and 86 were unchanged

* On the BSE, 1,943 stocks rose, 1,976 fell, and 89 were unchanged

* Nifty Realty: up 1.7%; Nifty FMCG: up 1%; Nifty Media: down 1%

BSE                                               NSE
Sensex: 80716.55, up 51.69 pts or 0.1%           `Nifty 50: 24613, up 26.30 pts or 0.1%        

End

Edited by Vidhi Verma

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