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Informist, Wednesday, Jul 24, 2024

By Anjali Singh

MUMBAI – The benchmark equity indices extended losses for the fourth consecutive session today with the fall in banking and financial services stocks weighing on the market. The impact of the increase in long-term and short-term capital gains taxes announced in the Budget is being discounted, analysts said. The hike had triggered a sharp intraday loss Tuesday.

Some participants said the market need not have fallen as much as it did Tuesday. Pramod Sultania, managing director at Nikunj Stock Brokers, said, "The market is driven by money and people are accepting the hike in capital gains tax."

Today's sell-off could be related to foreign institutional investors, who were net sellers on Tuesday as well, Deven Mehata, technical research analyst at Choice Equity Broking, said. Mehata said FIIs may have offloaded banking stocks, which weighed on the sectoral index on the day the weekly Nifty Bank options contracts expire.

Amid the selling pressure, the 50-stock benchmark index remained well above its strong support level of 24300 points, though it was in the red for most of the day. The Nifty 50 closed 65.55 points, or 0.3%, lower at 24413.50 points and the Sensex closed 280.16 points, or 0.4%, lower at 80148.88 points. Going forward, if the Nifty 50 closes above 24650 points, a further upside to 24800 points could be expected, Mehata said.

On Tuesday, Finance Minister Nirmala Sitharaman proposed a hike in long-term capital gains tax to 12.5% from 10% earlier, and short-term capital gains tax to 20% from 15% earlier. This came as a surprise to the Street, which was expecting a reduction in these taxes.

From the standpoint of the equity markets, the Union Budget will not materially alter its direction, Nuvama Institutional Equities said in a post-Budget report. "While the hike in capital gains tax could dampen sentiment in the near term, earnings is likely to be the key driver--where we think momentum is fading," the report added. 

Though the government retained its capital expenditure outlay for the current financial year, Elara Capital said the focus will now shift to execution from enthusiasm, with the initial euphoria in sectors such as aerospace and defence, railways, infrastructure, and shipbuilding expected to subside.

Investors will now turn their focus back to the June quarter corporate earnings, which are expected to set the tone for the market in the short term. Shares of Bajaj Finance fell today after several brokerages reduced the target price for the stock following lower-than-expected growth in bottom line. The company reported its quarterly results Tuesday. The diversified non-banking finance company's consolidated net profit for Apr-Jun rose 13.8% on year to 39.12 bln rupees, but missed the Street's view due to a sharp rise in provisions and losses on loans.

Broking firm Bernstein reportedly maintained its 'marketperform' rating on the company with a target price of 6,800 rupees and said a massive credit cost increase presents a grim picture. The stock closed nearly 2% lower at 6607.15 rupees on the National Stock Exchange.

Bajaj Finserv reported its earnings during market hours, following which the stock came off lows before falling again. The lender reported a consolidated net profit of 21.38 bln rupees in the June quarter, up 10% from the year-ago period. The revenue for the quarter was 314.80 bln rupees, up 35.2% on year.

Shares of Avanti Feed extended gains from Tuesday after Sitharaman said the National Bank for Agriculture and Rural Development would facilitate the financing and processing of shrimp production. "The industry prospects demand broadbasing the markets through premiumisation of products and geographical diversification of exports for the sustainable growth of shrimp industry players in the country, going forward," Gopal Pansari, associate director at CareEdge Ratings, wrote in a note today.

Shares of ICICI Prudential Life Insurance Co were among the top gainers in the Nifty 200 index after posting higher-than-expected growth in profit and across channels. Its net profit for the June quarter rose nearly 9% on year to 2.25 bln rupees on account of steady growth in premium income. 

* Of the Nifty 50 stocks, 19 rose and 31 fell

* Of the Sensex stocks, 11 rose and 19 fell

* On the NSE, 1,994 stocks rose, 702 fell, and 78 were unchanged

* On the BSE, 2,755 stocks rose, 1,143 fell, and 109 were unchanged

* Nifty Bank: down 0.9%; Nifty Private Bank: down 0.8%; Nifty Media: up 2.5%

BSE                                               NSE
Sensex: 80148.88, down 280.16 pts or 0.4%         Nifty 50: 24413.50, down 65.55 pts or 0.3%

End

Edited by Rajeev Pai

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