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Informist, Monday, Aug 12, 2024

By Alina Geogy

MUMBAI – The domestic benchmark indices ended marginally lower today. Hindenburg Research's allegations against the Securities and Exchange Board of India chairperson failed to kick off any major sell-off in the market today. Gains in some private banking stocks also helped the Nifty 50 recoup most of the initial losses.

Investor sentiment took a hit in early trade today after the US-based short-seller raised prospects of a conflict of interest in SEBI's investigation of the short-seller's allegations against the Adani group made in January last year. The research firm alleged that the SEBI Chairperson Madhabi Puri Buch and her husband Dhaval Buch had invested in an offshore fund in which a company controlled by Vinod Adani, elder brother of Adani group Chairman Gautam Adani, had also invested. Vinod Adani is a former director of Adani Enterprises and other Adani group companies.

The market is discounting Hindenburg's allegations as investors are now of the view that the research firm may have some vested interests, said Geetanjali Kedia, a senior research analyst at SPTulsian Investment Advisory Services. The weightage of the allegations has gone down now, she said. While some counter-allegations can be expected going forward, no one is taking them seriously this time, she said.

The Adani group companies had fallen sharply earlier today. Shares of Nifty 50 constituents Adani Enterprises and Adani Ports and Special Economic Zone had fallen around 5% each but ended 1.1 and 2.1% lower, respectively. Among Adani group stocks, shares of Adani Total Gas and Adani Power fell the most, down 11-14%. Shares of Adani Wilmar, Adani Green Energy, and Adani Energy Solutions fell over 6% each. However, most stocks came off lows while Adani Green Energy recovered slightly.

Investors also failed to get major triggers from global markets. Most equity indices in Asia and Europe were higher today but with muted gains. Meanwhile, those on Wall Street also ended with limited gains Friday. Investors await the inflation data from the US for July, due Wednesday. They are eyeing global cues and news about potential rate cuts by the US Federal Reserve, Kedia of SPTulsian Investment Advisory Services, said.

There is now a 51.5% probability that the US central bank will cut interest rates by 25 basis points at its next meeting in September, according to the CME FedWatch Tool. This is contrasting with data from last week when there was over 70% probability of the US central bank cutting rates by 50 bps amid fear of recession in the US economy.

The Nifty 50 and the BSE Sensex ended 0.1% lower each at 24347 points and 79648.92 points, respectively. Shares of heavyweight Reliance Industries and power generation company NTPC were the major laggards on the Nifty 50. On other hand, shares of Oil and Natural Gas Corp and Hero MotoCorp were the top gainers, up over 2% each. Shares of HDFC Bank and Axis Bank were among the major supporters of the Nifty 50 and even helped it recover briefly.

Investor sentiment towards shares of HDFC Bank was lifted on expectation that its weight in the MSCI Global Standard Index would nearly double. The lender's weight in the MSCI Index is set to increase to 7.2-7.5% from 3.8% currently, potentially leading to inflows of around $3.2 bln, according to Nuvama Alternative & Quantitative Research's report in July. The rebalancing announcement of the MSCI India Standard Index is scheduled post market hours today. Valuations of heavyweight private banking stocks were also comfortable in comparison with those of state-owned stocks, analysts said.

Shares of railway-related companies ended with sharp gains today after the government on Friday approved eight railway projects with a total estimated cost of 246.57 bln rupees. Shares of Rail Vikas Nigam ended 11% higher, while those of IRCON International ended nearly 3% higher. The approved projects will cover 14 districts across seven states and are expected to be completed by 2030-31 (Apr-Mar), the committee said.

Housing finance and infrastructure project stocks also benefitted from a government announcement. The Cabinet on Friday approved 30 mln new houses worth 3.6 trln rupees under the Pradhan Mantri Awas Yojana-Urban 2.0 scheme. Shares of Housing & Urban Development Corp ended nearly 3% higher after rising over 7% during the session. Shares of home loan provider Aavas Financiers ended over 4% higher after gaining as much as 8% earlier today.

There were several stock-specific reactions after companies released their June quarter earnings. Shares of Sun TV Network ended nearly 11% lower and were the worst-hit in the Nifty 200 index after the company's net profit and revenue declined on year in the June quarter. It also reported a fall in revenue from advertising and subscriptions on both an on-year and a sequential basis.

Shares of Bharat Dynamics ended 6.3% lower after falling as much as 15% to a two-month low, after the company reported weak June quarter earnings. The company's net profit for Apr-Jun plunged nearly 83% on year and revenue fell 36%. The June quarter performance was affected by supply chain issues due to the ongoing Russia-Ukraine war and conflicts in West Asia, which led to delayed payments from foreign original equipment manufacturers, according to various brokerage reports.

Shares of Balkrishna Industries lost 7% and hit a near-two-month low after brokerage firm Nomura Global Markets Research downgraded the company's rating to 'neutral' from 'buy'. While the company's net profit for Apr-Jun was higher than estimates, the management said sales volume growth would be flat on year in 2024-25 (Apr-Mar) amid macroeconomic challenges due to recessionary fears in the US, geopolitical tensions, inflationary raw material scenarios, and high freight costs.

On the other hand, shares of Voltas ended nearly 11% higher and hit a lifetime high after the company's earnings for Apr-Jun beat analysts' estimates. The topline of the home appliances company rose in the reporting quarter on the back of robust air conditioner sales and a healthy order book for its products and service businesses. Shares of Inox Wind ended nearly 20% higher at a record high after it reported a net profit in the June quarter against a loss in the year-ago period.

Inox Wind, a small-cap stock, was the top gainer on the Nifty 500 and Nifty Smallcap 250. The broad market indices, which were weak in early trade, recovered and outperformed the benchmark indices. The Nifty Smallcap 250 index was the top gainer among the broad market indices and ended 0.3% higher.

Shares of Ola Electric Technologies, which debuted on the NSE on Friday, hit its upper circuit again today. The electric vehicle player's stock traded for hardly two hours before it hit its 20% upper circuit of 109.44 rupees and went into a trade-halt until the market closed.

* Of the Nifty 50 stocks, 22 rose, 27 fell, and 1 was unchanged

* Of the Sensex stocks, 12 rose and 18 fell

* On the NSE, 1,353 stocks rose, 1,415 fell, and 68 were unchanged

* On the BSE, 1,899 stocks rose, 2,187 fell, and 99 were unchanged

* Nifty Media: down 2.1%; Nifty PSU Bank: down 1.2%; Nifty Realty: up 1.3%

BSE                                           NSE
Sensex: 79648.92, down 56.99 pts or 0.1%      Nifty 50: 24347, down 20.50 pts or 0.1%

End

Edited by Akul Nishant Akhoury

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