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Informist, Tuesday, Jul 30, 2024

By Noel John

MUMBAI – After a choppy start today due to weak global cues, headline domestic equity indices closed slightly up at their record ending highs. Gains were supported by stock-specific actions on the back of healthy earnings reported for the June quarter. Indices came off their highs during the final hour of trading as investors booked profits owing to expensive valuations and as they awaited further cues from the Federal Open Market Committee's meeting outcome, due late Wednesday.

The Nifty 50 and Sensex closed 0.1% higher each at 24857.30 points and 81455.40 points, respectively. The support for the 50-stock index is seen at 24450–24500 points, while the immediate resistance is seen at 25000 points. Investors did not place aggressive bets today on caution ahead of the US interest rate decision, analysts said. 

The US Fed meeting is expected to provide hints on the central bank's likely interest rate path. The FOMC's meeting gains prominence as investors look for hints on when the apex bank will start cutting rates this year, which the market widely expects to start from September.

"Although a surprise rate cut this week could boost markets, the likelihood remains low given inflation is still above the 2% target and the cautious approach of Fed Chair Jerome Powell," Suman Bannerjee, chief investment officer at Hedonova, said in a note today. "Consequently, investors should prepare for potential volatility, as the Fed's commentary on the future economic outlook will be crucial in shaping market expectations."

On the stock front, Tata Motors, Bharat Petroleum Corp, NTPC, and Power Grid Corp were the top gainers in the Nifty 50 index and hit their record highs today. However, a fall in shares of Reliance Industries, ITC, LTIMindtree, and Cipla capped the gains. 

Shares of Tata Motors rose for the fifth straight session owing to a liquidity-driven rally as funds have been pooling into the stock since Nomura's stock upgrade, Saral Seth, research analyst at IndSec Securities, said. The valuation of the stock is fairly priced, while those of its sectoral peers are stretched right now, the analyst said. Last week, brokerage firm Nomura Global Markets Research upgraded its rating on the stock to "buy" from "neutral" and raised the target price to 1,294 rupees from 1,141 rupees earlier. 

NTPC hit an all-time high as some broking firms raised the target price for the company after it raised the guidance for new thermal capacity addition. Brokerage firm Jefferies reportedly raised the stock's target price to 485 rupees from 445 rupees and maintained a 'buy' rating.

Power Grid Corp also hit an all-time high on the back of capital expenditure commentary by its management on Monday. The company's management has guided a capital expenditure of 180 bln rupees in 2024-25 (Apr-Mar) and 2.1 trln rupees for over the next seven years, ET Now reported, attributing Investec. The broking firm also upgraded the stock to "neutral" from "sell" and raised its target price to 361 rupees from 279 rupees earlier. Further, Press Trust of India on Monday reported that the state-run company is planning an undersea interconnection worth up to 400 bln rupees with countries in West Asia.

State-owned refining company Bharat Petroleum Corp's stock rose after a strong breakout with huge volumes, according to some technical analysts. Further, brokerage firm UBS on Monday raised the stock's target price to 400 rupees from 350 rupees earlier and maintained a "buy" rating. The brokerage expects the oil market to ease after Jul-Sep and sees "these companies benefit if their profits shift from the refining to the marketing segment." 

On the sectoral front, the Nifty Consumer Durables and Nifty Energy were the best performing sectoral indices as they ended over 1% higher each. Oil refining and gas companies also saw some buying owing to a fall in Brent crude oil prices. Shares of Hindustan Petroleum Corp, Gujarat State Petronet, and Indian Oil Corp were among the top gainers in the pack today.

The Brent crude September futures traded on the Intercontinental Exchange were down 0.7% at $79.21 at 1708 IST. "Oil prices dropped (today), extending their decline from the previous session due to concerns over demand in China, the world's largest crude importer, and as the market discounted the risk of escalating conflict in the Middle East," Shrikant Chouhan, head of equity research at Kotak Securities, said in a note.

Also, a fall in crude oil prices has positively impacted paint companies, according to some analysts. Shares of Asian Paints and Kansai Nerolac Paints were among the top gainers in the Nifty 50 and Nifty 500 indices, respectively. 

The broader market indices outperformed the benchmark gauges and were steady throughout the session. All Nifty Smallcap and Nifty Midcap indices hit their record highs today owing to strong domestic inflows, analysts said. 

On the downside, the Nifty FMCG and Nifty Healthcare were the worst performers. Investors are seen booking profits in shares of fast-moving consumer goods and pharmaceutical companies after their recent rally, said Shiju Koothupalakkal, technical and derivatives analyst at Prabhudas Lilladher. The FMCG and IT segments are giving signs of a minor pause in their uptrend, but the overall rise will remain intact, Aditya Gaggar, director of Progressive Shares, said in a note today.

Analysts had said the worst is behind for these two sectors, with recovery in rural demand expected to drive FMCG companies, while better order wins and likely better demand environment in the US is seen driving the financials of IT players.

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

* Of the Sensex stocks, 16 rose and 14 fell

* On the NSE, 1,597 stocks rose, 1,111 fell, and 75 were unchanged

* Nifty Consumer Durables: up 1.1%; Nifty Energy: up 1.1%; Nifty FMCG: down 1.1%

BSE                                              NSE
Sensex: 81455.40, up 99.56 pts or 0.1%          Nifty 50: 24857.30, up 21.20 pts or 0.1%

Edited by Manisha Baxla

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