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Informist, Thursday, Aug 1, 2024

By Noel John

MUMBAI – The Indian equity market extended gains for the fifth straight session and marked fresh lifetime intra-day as well as closing highs today, supported by rate-cut optimism in the US. Both the Nifty 50 and the Sensex hit fresh record highs in pre-open trade after the US Federal Open Market Committee's meeting outcome strengthened investors' hopes of a rate cut in September. The benchmark Nifty 50 index managed to cross its psychologically important level of 25000 points today after nearly a week of crawling up near that level.

On Wednesday, the US Federal Reserve kept the federal funds target rate unchanged at 5.25-5.50% for the eighth consecutive time, as was widely expected. "A reduction in the policy rate could be on the table as soon as the next meeting in September," Fed Chair Jerome Powell said in a press conference after the meeting. 

Back home, the Nifty 50 and the Sensex closed 0.2% higher each at 25010.90 points and 81867.55 points, respectively. "The Indian equity market has reached a significant milestone, reflecting the resilience of the domestic economy. Despite global volatility, India's economy remains strong, as indicated by the recent Union Budget's emphasis on infrastructure, fiscal prudence, and rural welfare," Neeraj Chadawar, head of fundamental and quantitative research at Axis Securities, said. 

The gains in the indices were primarily led by metal stocks, which later saw some profit booking. Shares of JSW Steel and Hindalco Industries rose nearly 3% each during the day before closing around 0.6% higher. Owing to Powell's commentary, the US 10-year bond yields fell, which is a positive for metal stocks back home, Raj Vyas, vice president of research at Teji Mandi, said in a note today. "Metal stocks were just trying to rebound from their short term support levels," Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market, said. However, in the absence of market participation, they failed to build the momentum, Kumar added. 

"Metal stocks get triggered by the slightest of things," a research analyst with a domestic brokerage said, while talking about today's early reaction. However, the analyst doesn't see these developments in the US having an impact on the fundamental investment thesis for any of these companies.

The second half of today's session saw a rise in shares of power and select oil and gas companies. Oil and Natural Gas Corp, which ended 2.3% higher, was one of the top gainers in the Nifty 50. Oil companies were in focus today after the government reduced the windfall gains tax on domestically produced crude oil by 2,400 rupees a tn to 4,600 rupees a tn. 

Shares of power companies such as Power Grid Corp, Coal India, Adani Energy Solutions, and Tata Power were among the top gainers in the market today. Power Grid ended nearly 4% higher, becoming the top gainer in the Nifty 50.  

Coal India closed 3.5% higher after the company's consolidated net profit in Apr-Jun beat analysts' estimates. Some brokerages shared a positive outlook for the company and raised their earnings estimates and stock target prices. The company's consolidated net profit of 109.6 bln rupees for Apr-Jun was much higher than analysts' estimate of 73.6 bln rupees.

Shares of Adani Enterprises and Adani Ports and Special Economic Zone extended their gains after reporting healthy June quarter results. Adani Enterprises' consolidated net profit rose a whopping 116% on year to 14.55 bln rupees. Adani Ports and Special Economic Zone posted an over 47% on-year jump in consolidated net profit to 31.13 bln rupees in the June quarter, backed by higher cargo volumes. The growth in cargo was primarily driven by containers, and liquid and gas, which helped the company to overcome cargo loss due to a workers' strike at Gangavaram port. 

On the downside, shares of automobile companies were the worst performers in the market today, with those of Mahindra & Mahindra, Hero MotoCorp, and Tata Motors falling the most in the 50-stock index. Mahindra & Mahindra extended losses after the company's net profit fell 5.3% on year in the June quarter on account of a high base in the year-ago period. The automobile company also reported flat growth in overall vehicle despatches for July compared to a year ago, as a healthy increase in passenger vehicle volumes was offset by lower commercial vehicle and three-wheeler sales volumes. 

Also, Tata Motors fell after the company reported an 11% on-year decline in its sales volume for July. Moreover, its domestic commercial vehicle sales were down 19% on year at 25,436 units. 

The broader market indices, barring the Nifty Smallcap 100, hit all-time highs today, but then fell as investors booked profits. Analysts expect these indices to witness more selling in the coming two or three sessions, before stabilising. Shares of Sonata Software and KRBL were the worst performers in the broader market owing to weak earnings for the June quarter. "While mid-cap and small-cap stocks have made significant gains, it is believed that large-cap stocks may see increased investor interest in the near future," Chadawar of Axis Securities, noted.

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

* Of the Sensex stocks, 15 rose and 15 fell

* On the NSE, 1,008 stocks rose, 1,725 fell, and 67 were unchanged

* On the BSE, 1,577 stocks rose, 2,383 fell, and 88 were unchanged

* Nifty Energy: up 2%; Nifty Oil & Gas: up 0.4%; Nifty Realty: down 1.7%

BSE                                              NSE
Sensex: 81867.55, up 126.21 pts or 0.2%          Nifty 50: 25010.90, up 59.75 pts or 0.2%

End

Edited by Tanima Banerjee

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