More Stories

Informist, Wednesday, Aug 7, 2024    

By Alina Geogy

MUMBAI – The domestic benchmark indices snapped a three-day losing streak and ended with gains of over 1% today as positive momentum in global markets offset concerns about geopolitical developments in West Asia, a possible recession in the US, and unwinding of the yen carry trade, analysts said. The domestic markets had been roiled by these worries for the past few sessions, leading to broad-based selling, especially by foreign investors.

The headline indices opened on a positive note tracking gains in their global counterparts. Indices were largely range-bound after early gains and managed to sustain those gains. The Nifty 50 closed 1.3% higher at 24297.50 points and the Sensex closed 1.1% higher at 79468.01 points.

Most equity indices in Asian markets rose for another day, which came as a breather for domestic investors. Sentiments were supported by a slight weakness in the Japanese yen and dovish comments by the Bank of Japan's Deputy Governor Shinichi Uchida. Today, Uchida said the Japanese central bank would maintain easy monetary conditions for the time being, and not raise key interest rates when markets are unstable. Japan's Nikkei 225 recovered sharply from initial losses and ended 1.2% higher. The gains come after the yen weakened today. At 1710 IST, the yen was at 147.07 against the dollar, down from 144.52 Tuesday. 

Overnight, indices on Wall Street rebounded after officials of the US Federal Reserve soothed investors by refuting recession worries. San Francisco Federal Reserve President Mary Daly on Monday indicated that she was not overly concerned about the jobs data for July or an impending recession. She said the US labour market was "slowing but not falling off a cliff", Dow Jones reported. She said a "policy adjustment" was coming sooner than later and that there was no cause for alarm, according to the report. Both the S&P 500 and NASDAQ Composite indices ended over 1% higher each Tuesday, snapping three-day losing streaks.

The India VIX, the "fear gauge" of the market, ended nearly 14% lower at 16.17 today, indicating a drop in volatility. "Markets experienced a breather after the recent decline... Although volatility has significantly cooled off after the sharp surge, there remains potential for further decline," Ajit Mishra, senior vice-president of research at Religare Broking, said in a note.

The Nifty 50 and the Sensex both lost over 4% in the past three sessions. A fourth of the losses have been recouped with today's gains. Overall, the Indian equity market is outperforming the global markets, Nandish Shah, senior derivatives analyst at HDFC Securities, said. This is evident as the domestic benchmark indices are only about 2-3% away from their all-time highs, while their global counterparts are still 10-15% lower than their record highs, Shah said.

Of the Nifty 50 constituents, only eight stocks ended the day in the red. Shares of Oil and Natural Gas Corp ended 7.5% higher as the top gainer in the index. Some brokerages, such as Prabhudas Lilladher, Anand Rathi Share and Stock Brokers, and Nuvama Institutional Equities, raised their target prices for the stock after the company's post-earnings conference call. Late Monday, the oil company reported that its net profit for the June quarter fell over 15% on year to 89.38 bln rupees, a smaller decline than analysts had expected. The company's revenue rose 4.3% on year to 352.66 bln rupees.

ONGC plans to ramp up oil production from its KG-98/2 block in the Bay of Bengal to 30,000 bbl per day in Oct-Dec from the current 12,000 bpd, the company said in a post-earnings call Tuesday. The company also expects peak production of 45,000 bpd in subsequent quarters, it said. ONGC has guided for 12% growth in crude oil production and 27% growth in gas production volume over the next three years, driven by rising production from its KG-98/2 fields on the eastern coast, development of its offshore project in Daman, and monetisation of stranded gas reserves, Motilal Oswal Financial Services said in a report. Prabhudas Lilladher upgraded the rating on the stock to 'hold' from 'reduce', citing a "correction in stock price".

Shares of Coal India ended 6.4% higher and were the second top gainer on the Nifty 50. The Adani Group stocks also gained today, with Adani Enterprises and Adani Ports and Special Economic Zone rising over 3%.

Gains in banking stocks were muted. All sectoral indices ended higher, but the Nifty Bank and Nifty Private Bank gained the least. The Nifty Oil & Gas, Nifty Metal, and Nifty Media were the top gainers. Nifty Oil & Gas snapped a three-day losing streak today as most of its 15 constituents ended with gains. Oil India, Oil and Natural Gas Corp, and Castrol India were the best performers in this index, ending 5.8-8.1% higher.

Metal was another sector that shone, with the Nifty Metal recording sharp gains for the second straight session. Only two out of 15 stocks in this sectoral index ended lower. Shares of Steel Authority of India, Vedanta, and Hindustan Copper ended with over 4% gains each.

Shares of information technology companies also gained on hopes that a potential rate cut by the Fed could stimulate spending and aid recovery. In the Nifty IT index, nine out of 10 constituents ended in the green. Persistent Systems, Mphasis, and Infosys were the top gainers.

Meanwhile, quarterly earnings and commentary by the managements of some companies gave cues to investors, which resulted in stock-specific reactions. Shares of Cummins India ended over 6% higher, extending gains after the management maintained its guidance of double-digit revenue growth in 2024-25 (Apr-Mar). "We have been ahead of the curve as far as profit is concerned," the managing director said. Late Tuesday, the company had reported 33% on-year growth in net profit for Apr-Jun aided by robust domestic demand, though it didn't meet analysts' expectations.

Shares of Gland Pharma ended nearly 4% lower after the company's key earnings metrics for the June quarter missed analysts' estimates. The pharmaceutical company's stock had fallen over 9% to a near-one-month low earlier today. The company's consolidated net profit for Apr-Jun fell nearly 26% on year, weighed by losses incurred by European subsidiary Cenexi.

Shares of Shree Cement ended nearly 4% lower after lower-than-expected earnings for the June quarter, largely due to sluggish demand and weak realisations. The cement company's net profit for the quarter fell over 45% on year, sharply missing analysts' estimates. Shares of luxury hospitality company EIH fell to a six-month low, losing over 4% and becoming the worst-hit in the Nifty 500, after the company's consolidated net profit for Apr-Jun fell over 11% on year and nearly 59% sequentially.

The broader market indices outperformed the benchmark indices today, with each gaining over 2%. The Nifty Smallcap 50 was the best performer among the broader market indices, ending with 3% gains. The Nifty Midcap 150 rose the least, with 2.2% gains.

* Of the Nifty 50 stocks, 42 rose and 8 fell

* Of the Sensex stocks, 25 rose and 5 fell

* On the NSE, 2,208 stocks rose, 521 fell, and 79 were unchanged

* On the BSE, 2,961 stocks rose, 983 fell, and 87 were unchanged

* Nifty Oil & Gas: up 3.1%; Nifty Metal: up 2.7%; Nifty Private Bank: up 0.5%

BSE                                           NSE
Sensex: 79468.01, up 874.94 pts or 1.1%       Nifty 50: 24297.50, up 304.95 pts or 1.3%

End

Edited by Vidhi Verma and Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.