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Informist, Friday, Aug 9, 2024

By Alina Geogy

MUMBAI – Benchmark domestic indices tracked gains in global markets and rebounded today, recouping some of the losses made earlier this week due to recession worries in the US and the unwinding of yen carry trades. Investor sentiment, which took a hit at the start of this week, improved after US labour data indicated that fears of a recession in the US might have been overblown. Both the Nifty 50 and the BSE Sensex ended with over 1% gains each, but were still down 1.4-1.6% in weekly terms.

Higher probability of a rate cut by the US Federal Reserve at its next monetary policy meeting, largely in-line corporate earnings for the June quarter, and support for the market from domestic inflows, are helping the market gain, Amish Shah, research analyst at Taurus Corporate Advisory Services, said.

The indices opened on a positive note today, tracking gains in global markets such as the US and Asia. Headline indices in the US market surged on Thursday after the initial jobless claims came lower-than-expected at 233,000 for the week ended Aug 3. As per Dow Jones poll, this was expected to come in at 240,000 claims.

This labour market data takes prominence because just last week, the unemployment rate in the US for July was reported at 4.3% instead of the expected 4.1%. This led to worries that the labour market was cooling faster than expected and doubts about whether the US Federal Reserve was too late in cutting interest rates. These concerns around the US economy, along with the appreciation in the yen, triggered the unwinding of yen carry trades leading to a sell-off across global equity markets on Monday.  

Today, sentiments were also positive after JP Morgan's report said 75% of the global carry trade had already been unwound, Shah of Taurus Corporate Advisory Services, said.

Today, the Nifty 50 ended 250.50 points higher at 24367.50 points, while the Sensex ended 819.69 points higher at 79705.91 points. Further, India VIX, the volatility index, fell nearly 8% to settle at 15.3350, indicating a decline in market volatility.

The frontline indices were supported by gains across information technology, banking, and select oil stocks. The information technology sector benefitted after recession worries were soothed by the better-than-expected weekly labour data. The sector is also likely to benefit from potential rate cuts by the US Federal Reserve, which could improve their revenue growth by garnering more clients and deals. 

The IT sector has been gaining buying momentum of late as most companies posted improvement in their Apr-Jun earnings, and also signalled a pick-up in deal wins and signs of demand recovery which could improve their financials in 2025-26. Among information technology stocks, Tech Mahindra and HCL Technologies were among the top gainers, ending with over 2% gains each.

Shares of lenders such as State Bank of India and HDFC Bank also contributed to the gains in the index. Shares of index-heavyweight Reliance Industries, which ended nearly 2% higher, were the top contributor to the gains.

Shares of Eicher Motors rose over 5% after the company posted a better-than-expected consolidated net profit for the June quarter. Factors such as a rich product mix, higher average selling price, and moderation in commodity prices helped the company offset the impact of lower volumes on earnings for the quarter. However, Nuvama Institutional Equities expects the company's underperformance to persist "as launches are in niche categories with limited volume potential." Going forward, the brokerage sees the company facing increased competition from Bajaj Auto, Hero MotoCorp, and TVS Motor Co. 

All sectoral indices ended in the green. The Nifty PSU Bank, Nifty Auto, and Nifty Media were the best performing sectoral indices, while Nifty FMCG gained the least. The Nifty IT index ended over 1% higher aided by gains in all ten constituents. The Nifty Bank index, up 0.7%, ended higher for the third straight session.

The broader market indices also ended higher, but underperformed the benchmark indices. The Nifty mid-cap indices ended 0.7-0.9% higher, with the Nifty Midcap 100 being the top gainer among the pack.

In the Nifty 500, shares of Trent were among the top gainers, while those of Alembic Pharmaceuticals and Steel Authority of India fell the most. Shares of Trent gained over 11% after net profit and revenue for Apr-Jun beat analysts' estimates.

Meanwhile, shares of Alembic Pharma extended losses after the company's consolidated net profit for Apr-Jun missed analysts' estimates. Shares of Steel Authority of India ended nearly 6% lower after the company reported that its net profit for Apr-Jun nosedived nearly 93% on year after incurring a one-time cost. 

Among other stocks, shares of NBCC (India) rose over 9% after the company said it secured an order worth 150 bln rupees from the Srinagar Development Authority to develop a satellite township in Srinagar, Jammu and Kashmir. Shares of Bharat Rasayan rose 20% today and hit an upper circuit, which was also a one-month-high, after the company's consolidated net profit for the June quarter surged over 508% on year.

Another stock which hit the upper circuit today was Ola Electric Technologies, which debuted on the NSE at its issue price of 76 rupees today. The electric vehicle player's stock soon hit its 20% upper circuit of 91.20 rupees and was stuck in a trading halt till the market closed. Shares of Bayer Cropscience ended nearly 5% lower at a one-month low after the company posted an on-year fall in both net profit and revenue for Apr-Jun.

* Of the Nifty 50 stocks, 44 rose and 6 fell

* Of the Sensex stocks, 28 rose and 2 fell

* On the NSE, 1,658 stocks rose, 1,029 fell, and 94 were unchanged

* On the BSE, 2,283 stocks rose, 1,626 fell, and 97 were unchanged

* Nifty PSU Bank: up 1.9%; Nifty Media: up 1.8%; Nifty FMCG: up 0.2%

BSE                                          NSE
Sensex: 79705.91, up 819.69 pts or 1%        Nifty 50: 24367.50, up 250.50 pts or 1%

End

Edited by Vidhi Verma

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