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Informist, Monday, Jul 22, 2024

By Alina Geogy

MUMBAI – After swinging between gains and losses, benchmark domestic indices today ended marginally lower amid caution ahead of the Union Budget for 2024-25 (Apr-Mar), scheduled for Tuesday. This will be the eleventh Budget of the Narendra Modi-led government and is expected to focus on fuelling the rural economy, and at the same time stick to its agenda of capital expenditure and infrastructure development, analysts said. Meanwhile, the June quarter earnings season led to a number of stock-specific reactions today.

There are divided views on what the Budget may bring to the table and concerns that it may fall short of the market's expectations. While the capital expenditure cycle is expected to continue, there are now concerns that populist measures may not be up to that extent as the market had expected, an assistant vice president of equity research at a domestic broking firm said. There were hopes that the government would announce ample populist measures, which could lift consumption demand, the analyst said.

"The Budget is expected to strike a balance between capital expenditure and addressing rural challenges," said Naveen Kulkarni, chief investment officer at Axis Securities, in a note. Moreover, a higher-than-expected dividend from the Reserve Bank of India has provided some flexibility to progress further with welfare schemes, he said.

Coming back to the stock market, among the major laggards in today's choppy session was Wipro, which fell a whopping 10% during the day after announcing weak guidance for the ongoing quarter, followed by bearish comments from various brokerage firms. So far, Wipro was the only information technology stock on the Nifty 50 which declined after posting its June quarter results. Its peers, Tata Consultancy Services, Infosys, and HCL Technologies, had surged on the back of a better business outlook for the current financial year. 

Another laggard was the oil-to-retail major Reliance Industries, which closed 3.5% lower after posting lower-than-expected earnings. However, some brokerage firms raised their target price, attributing to a strong business outlook. 

Both Wipro and Reliance Industries weighed on the Nifty 50, which closed nearly 22 points or 0.1% lower at 24509.25 points. The support for the Nifty 50 is seen at 24200 points and resistance at 24800 points for Tuesday, according to Brijesh Ail, head of technical and derivatives at IDBI Capital Markets & Securities. The BSE Sensex ended the session 0.1% lower at 80502.08 points.

Further, shares of Kotak Mahindra Bank weighed on benchmark indices and ended over 3% lower after the bank reported a fall in its net interest margin for the June quarter due to higher cost of funds and a lower share of unsecured loans. JSW Steel also fell nearly 3% to a one-month low after the steel major's consolidated net profit for Apr-Jun missed analyst estimates by a wide margin. The fall in the bottomline was due to lower sales volume, inventory losses, and costs pertaining to planned shutdowns at some of the company's units.

On the other hand, Nifty 50 constituents UltraTech Cement and HDFC Bank ended over 2% higher each. Shares of HDFC Bank were among the major gainers in the Nifty 50 after the bank's net profit for Apr-Jun beat market estimates due to an improvement in net interest margin and lower provisioning. The expansion in net interest margin was aided by an increased share of retail loans and higher liquidity coverage ratio, Nuvama Institutional Equities said in a report. 

Further, several brokerage firms were positive on shares of cement player UltraTech, with some raising the target price on hope that the company could outperform the industry's growth. The optimistic view came despite the company posting weak earnings for Apr-Jun. 

Fertiliser stocks, including Rashtriya Chemicals & Fertilizers and Fertilizers & Chemicals Travancore, ended sharply higher on hope of a boost for the agriculture sector in the Budget. This sector in India grew at an annual average rate of 4.2% in the last five years, and remains critical for the country's economic growth, according to the Economic Survey by the government released today. It also said the sector provides livelihood support to about 42.3% of India's population, and has a share of 18.2% in the country's GDP at current prices.

Further, the survey projected India's real GDP growth at 6.5-7.0% for the current financial year, against 8.2% growth last year. This projection is lower than the Reserve Bank of India's forecast of 7.2%.

The Indian equity market also took cues from its global peers, including Asia and the US. Benchmark equity indices in the US had ended lower on Friday amid a global technical outage caused by a software glitch. Most stock indices in Asia ended lower today after US President Joe Biden dropped out of the presidential race, while European markets ended in gains after Biden endorsed Vice-President Kamala Harris as the candidate. 

On Sunday, US President Joe Biden had withdrawn from the US presidential election race and endorsed Vice-President Kamala Harris as the new Democratic nominee, as per a letter posted on social media platform X, formerly Twitter.

* Of the Nifty 50 stocks, 30 rose and 20 fell

* Of the Sensex stocks, 14 rose and 16 fell

* On the NSE, 1,544 stocks rose, 1,179 fell, and 94 were unchanged

* On the BSE, 2,190 stocks rose, 1,822 fell, and 140 were unchanged

* Nifty Auto: up 1.2%; Nifty Healthcare: up 1.1%; Nifty Oil & Gas: down 0.6%

BSE                                               NSE
Sensex: 80502.08, down 102.57 pts or 0.1%         Nifty 50: 24509.25, down 21.65 pts or 0.1%

End

Edited by Akul Nishant Akhoury

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