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Informist, Monday, Jul 29, 2024

By Noel John

MUMBAI – Hardly a quarter of a point away from the psychological level of 25000 points, the benchmark Nifty 50 fell and closed largely unchanged as investors booked profits after the index hit a fresh record high. The 50-stock today hit a record high of 24999.75 points, while the Sensex notched a lifetime high of 81908.43 points today.

The sharp gains in early trade were driven by a rally in their global peers and strong earnings of select major companies. The domestic market turned choppy in the second half of the session as investors struggled to find a direction after the record high. The Nifty 50 and the Sensex ended at their record closing highs. The Nifty 50 closed hardly two points higher than its previous close at 24836.10 points. The BSE Sensex also ended the session largely flat at 81355.84 points.  

The Nifty 50 index failed to breach the psychology barrier, 25000 points, as there were call writers at that level, according to Brijesh Ail, head of technical and derivatives at IDBI Capital Markets & Securities. Going forward, strong support for the index is pegged at 24200 points, he said. 

Investor sentiment remains positive owing to several factors such as strong quarterly results, a lower fiscal deficit target of the government for the current financial year and disinvestment plans, fall in Brent crude prices, and an impressive rollover to August futures and options, Vikas Jain, head of research at Reliance Securities, said in a note today. Owing to these supportive cues, the Nifty 50 and the Sensex hit record highs in pre-open trade. 

On the global front, US equity indices ended higher on Friday after the personal consumption expenditure data strengthened hopes of a rate cut in September. Asian indices also gained, tracking the rise seen in their US counterparts. 

Going further, investors will likely take cues from the rest of the June quarter earnings, trends in the global markets, and the upcoming release of key economic data, Avdhut Bagkar, technical and derivatives analyst, StoxBox said in a note today. Investors in the region will also be eyeing the US Federal Open Market Committee meeting, which starts Tuesday. As per the CME FedWatch Tool, there is a 95.9% probability of the central bank keeping the rate unchanged at next week's meeting, but there is 85.8% probability of a rate cut in September.

The recent gains seen in indices are also a result of strong inflows into equities from both domestic and foreign investors. On Friday, foreign investors turned net buyers after being sellers in the Indian market in the previous three consecutive sessions. They net bought 25.46-bln-rupee worth of equities on Friday, becoming net buyers for the fourth straight week. 

India saw big outflows from the equity market in 2022, when the US Federal Reserve hiked interest rates aggressively, Morgan Stanley said in a research report today. "The Fed is likely to cut rates in the next few months and the policy rate over the next 6-12 months should be lower, rather than higher. This should provide a constructive backdrop for India's foreign portfolio," the foreign broking firm said. "Hence, equity inflows are likely to continue, especially when China growth continues to surprise on the downside," it added. 

On the earnings front, shares of NTPC hit its record high after the company reported a 11% on-year growth in net profit for the June quarter to 45.11 bln rupees and revenue rose 13.5% to 444.19 bln rupees. ICICI Bank closed marginally higher after rising about 2% intra-day. The shares rose after the bank's Apr-Jun net profit rose 14.6% on year due to steady loan growth and a sharp rise in other income. NTPC and ICICI Bank reported their Apr-Jun earnings on Saturday.

Further, shares of Shriram Finance extended gains from Friday after the company reported an improvement in its asset quality in Apr-Jun and also some brokerages have raised the target price for the stock. The non-banking financial services company's net profit for the June quarter rose 18.2% on year to 19.81 bln rupees. 

A fall in the shares of private banking players, such as HDFC Bank, Kotak Mahindra Bank, and Axis Bank, weighed the indices lower, with the Nifty Bank closing less than 1000 points lower from its intraday high. The 1000-point fall in the banking index from its high was also the trigger for the sharp rise in India VIX index, Deven Mehata, technical research analyst at Choice Broking, said. The Nifty Bank index closed 0.2% higher at 51406.25 points. The fear gauge, India VIX, also hinted at near-term nervousness in the market and closed nearly 5% higher at 12.8325. The volatility index rose after closing lower in the previous session.

Among sectoral indices, the Nifty PSU Bank was the best performer and ended 2.3% higher with all its constituents in the green. Shares of Punjab National Bank, Bank of India, and Union Bank of India were the top gainers in the pack. Punjab National Bank's shares rose sharply after its net profit for Apr-Jun came in higher than expectations. Some brokerages have also raised the target price of the stock slightly after its strong June quarter earnings. 

Even though the benchmark equity indices corrected from their record highs, the broader market indices stood firm throughout the session. Barring the Nifty Smallcap 100, all midcap and smallcap indices notched their lifetime highs today. Today's momentum in the broader market indicates that the short-term correction in the space is completed, Mehata of Choice Broking, said. 

* Of the Nifty 50 stocks, 25 rose and 25 fell

* Of the Sensex stocks, 14 rose and 16 fell

* On the NSE, 1,629 stocks rose, 1,102 fell, and 96 were unchanged

* On the BSE, 2,348 stocks rose, 1,706 fell, and 144 were unchanged

* Nifty PSU Bank: up 2.25%; Nifty Media: up 1.8%; Nifty IT: down 0.38%

BSE                                              NSE
Sensex: 81355.84, up 23.12 pts or 0.03%          Nifty 50: 24836.10, up 1.25 pts or 0.01%

End

Edited by Manisha Baxla 

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