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Informist, Thursday, Aug 8, 2024

By Anjana Therese Antony

MUMBAI – Global woes may perturb investors in India again in the absence of major domestic triggers on Friday, analysts said. Concerns about the possibilities of the US economy going into a recession and geopolitical tension in West Asia have been prompting investors to keep a bearish bias towards the Indian stock market.

Today, the Nifty 50 and the BSE Sensex closed 0.7% lower each at 24117 points and 78886.22 points, respectively. The support for the 50-stock index is pegged at 24000-23900 points and resistance at 24300-24500 points. The fear gauge, India VIX, rose after closing lower in the previous two sessions, hinting at the slight near-term nervousness in the market. The volatility index closed near 3% higher at 16.6025. 

Though India is a strong emerging market and has robust macroeconomic growth prospects, there could be spillovers from global markets in case the fears turn out to be true, a research analyst at a domestic broking firm said. The analyst also said the hawkish approach of the Reserve Bank of India today during its policy announcement and the slowdown in corporate earnings growth during the June quarter may weigh on sentiment in the near term. 

The apex bank kept the repo rate unchanged at 6.50% for the ninth time and retained the stance of 'withdrawal of accommodation'. Governor Shaktikanta Das said inflation is slowing down, but at a lower pace, which raised concerns about whether there will be a delay in the RBI's rate cut trajectory. 

Nirmal Bang Institutional Equities continues to expect a shallow rate cut cycle of 50 basis points, beginning February 2025, it said in a report. "However, any substantial worsening in global macro conditions may lead to the RBI advancing its rate cut cycle," the report said.

There are also views that a recessionary scenario may not hold true in the world's largest economy. "We are not in the camp of a global hard-landing scenario and do not see drastic US rate cuts in CY24 (2024)," Madhavi Arora, lead economist at Emkay Global Financial Services, said a note today.

Defensive stocks such as pharmaceuticals are likely to extend gains in the coming sessions, valuations of which are reasonable, according to analysts. Today, Nifty Pharma and Nifty Healthcare were the only two sectoral indices which hit their record highs.

Among specific stocks, Eicher Motors will be in focus as the company reported a higher-than-expected net profit of 11.01 bln rupees for the June quarter, up 20% on year. Its revenue grew 10% to 43.93 bln rupees during the quarter. The stock closed 0.4% lower at 4,576.90 rupees on the National Stock Exchange. 

Additionally, Grasim Industries will be in focus as the company will release its Apr-Jun earnings on Friday. The company's net profit is expected to be 1.52 bln rupees, while the revenue from operations is seen at 73.12 bln rupees, as per the average of estimates from four broking firms. The stock closed 3.5% lower at 2,544.65 rupees.  End

Edited by Vidhi Verma

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