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Informist, Monday, Aug 12, 2024

By Anjali Singh

MUMBAI – The benchmark domestic indices are expected to move sideways on Tuesday amid a lack of major triggers, analysts said. As the quarterly earning season nears its end, market participants' focus will shift to global markets for cues. Some stock-specific action may be expected in the upcoming session as investors may react to the quarterly earnings of companies, particularly Hero MotoCorp, Hindalco, and Apollo Hospitals – all Nifty 50 constituents.

Investors will also look forward to MSCI's changes to global indices as part of its quarterly review. The rejig will lead to action in stocks that are a part of the rejig. Shares of HDFC Bank will be in focus as its weight in the MSCI Emerging Markets Index is expected to rise. Nuvama Alternative & Quantitative Research expects HDFC's weight to rise to 7.2-7.5% from the current 3.8%, which could potentially bring $3.2 bln-$4 bln of inflows into the stock over six days as a base case, the brokerage said. Shares of HDFC Bank extended gains for the fourth straight session and closed 0.6% higher at 1,660.10 rupees today.

Today, the Nifty 50 closed 20.50 points or 0.1% lower at 24347 points and the Sensex closed 56.99 points or 0.1% lower at 79648.92 points. Going forward, the Nifty 50 will likely find support at 24300 points and may face resistance at 24500-24550 points. If the Nifty 50 manages to sustain above the 24400 level, we may see a further upside till 24700 points, Ajit Mishra, senior vice president of technical research at Religare Broking, said. Currently, the 50-stock index struggles to sustain above 24000 points due to pressure from select heavyweight stocks, he added. "This trend may persist until we see a more decisive movement in banking majors," Mishra said in a note.

Axis Securities advised to buy on dips as short-term corrections can present attractive entry points. "From current levels, the short to medium-term trend continues to remain bullish, with expectations of the bulls maintaining control and pushing the index towards the 25000–25500 levels," the brokerage said.

Amid a dearth of domestic triggers, market participants will closely watch economic data releases from the world's biggest economy. The US CPI data for July is expected to provide hints about the future trajectory of interest rates. Earlier this month, weak employment data in the US led to concerns about a recession and consequently, to a sell-off in global markets.

It is widely expected that the US Federal Reserve will cut interest rates at its September meeting, but the quantum of the cut is being debated. The CME Fedwatch tool shows a 49.5% probability of a 25-basis-point cut in interest rates at the September meeting and a 50.5% probability of a 50-bps cut. The US is scheduled to release its PPI and CPI for July on Tuesday and Wednesday, respectively.

Closer home, India's annual CPI inflation was 3.54% for July compared with 5.08% in June. This was lower than the 3.7% expected as per a poll by Informist. The headline CPI fell below the Reserve Bank of India's medium-term target of 4% for the first time in nearly five years in July, mainly due to a statistical effect of a high base.

Today, benchmark indices ended marginally lower after rising briefly in the session. Investor sentiment was dented in early trade today after the US-based short-seller Hindenburg Research alleged that the Securities and Exchange Board of India's 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. However, the market soon recovered on the back of a rise in banking stocks, which rose owing to their reasonable valuations and are expected to gain further. However, this rally was short-lived and stocks fell again on profit-booking. Shares of most Adani companies ended the session lower, with Adani Enterprises closing 1% lower and Adani Ports and Special Economic Zone closing 2% lower.

The market is expected to move higher in the coming sessions as investors will factor in the strong corporate earnings expected in the September quarter, Vinit Bolinjkar, head of research at Ventura Securities said. Jul-Sep corporate earnings are expected to be robust as the quarter is usually a strong quarter for companies due to festivals. Sectors related to consumption are expected to perform well in the upcoming sessions on the back of healthy rainfall and government spending, Bolinjkar said. These sectors include agro-chemicals, ethanol, sugar, automobiles and fast-moving consumer goods.

In the medium-term, shares of railway-related and defence stocks are expected to remain under pressure due to their expensive valuations. These stocks gained significantly after the general elections and the Union Budget on the back of policy continuity. However, shares of railway-related companies rose today after the Cabinet Committee on Economic Affairs on Friday approved eight railway projects with a total estimated cost of 246.57 bln rupees.

Shares of Apollo Hospitals Enterprises, Hero MotoCorp, and Hindalco Industries will be in focus as these companies are slated to announce their quarterly earnings on Tuesday. Apollo Hospitals is expected to report a 40% rise in consolidated net profit at 2.3 bln rupees for the June quarter. The Street expects Hero MotoCorp to report strong growth in key earnings metrics for the June quarter on the back of a 13.5% year-on-year increase in dispatches, richer product mix, and a recovery in sales of entry-level motorcycles. Hindalco Industries's topline and operating profit are expected to rise sequentially due to higher domestic aluminium prices in the June quarter compared with the previous quarter.  End

Edited by Vidhi Verma

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