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Informist, Monday, Aug 19, 2024

By Noel John

MUMBAI – Benchmark equity indices ended mixed today after a muted session owing to a lack of domestic triggers, analysts said. While the Nifty 50 remained marginally higher throughout the session, the Sensex was juggling between losses and gains. Shares of metal, oil, and power companies were the major gainers in the Nifty 50 index, while those of select banking and financial services companies fell the most. 

Today, the Nifty 50 ended 0.1% higher at 24572.65 points, while the Sensex ended marginally lower at 80424.68 points. The market was driven by stock-specific actions and sector rotation, due to a lack of major domestic cues, Sunny Agrawal, head of fundamental equity research at SBI Securities, said. The 50-stock index is now expected to find support at 24400 points and resistance at 24700 points. 

Investors have booked profits today after the sharp gains seen on Friday, analysts said. "We think the market is fairly valued and a near-term upside would come only if the earnings revision momentum returns," Emkay Global said in a research report today. Weak commodity prices, a possible rate cut in the US in September, and a recovery in consumption demand are significant tailwinds for Indian equities, but slowing consumption at the premium-end remains a worry, the brokerage added. 

From the macroeconomic perspective, India is enjoying the best growth-inflation dynamics globally, while the corporate profit cycle continues to expand, thereby making stocks expensive, ICICI Securities said in a report today. "Expensive valuations and rise in global market risk will likely keep FPI flows volatile in the short term," the brokerage said. Foreign institutional investors net sold Indian equities in three of the last four sessions. They net sold shares worth 93.8 bln rupees during the period. However, they net bought shares worth 7.7 bln rupees on Friday. 

On the sectoral front, shares of oil, metal, and power companies helped the Nifty 50 index to end with marginal gains. Shares of Hindalco Industries, Bharat Petroleum Corp, and Coal India were among the top gainers in the index. However, the gains were offset by losses in shares of select automobile and banking stocks such as Mahindra & Mahindra, Axis Bank, and IndusInd Bank.

Shares of oil companies ended higher today, with those of Bharat Petroleum Corp and Oil and Natural Gas Corp becoming two of the top gainers in the Nifty 50 index. Oil companies have reacted positively to the fall in crude oil prices, as Iran has so far not attacked Israel as expected, and to the reduction in windfall tax on domestically produced crude oil, Saral Seth, vice president of institutional equities at IndSec Securities, said. October Brent crude oil futures were at $79.1 per barrel at 1657 IST on the Intercontinental Exchange, down 0.8%.

On Friday, the government had cut the windfall gains tax on domestically produced crude oil by 2,500 rupees a tn to 2,100 rupees a tn. Following the development, shares of Mangalore Refinery & Petrochemicals, Oil India, and ONGC rose today. The reduction in the windfall gains tax on domestically produced crude oil will be positive for exploration companies such as Reliance Industries and ONGC as their realisations would improve by 2-3% and thus drive improved profitability, Seth of IndSec Securities, said. 

Investor sentiment towards these stocks has also improved recently after the government approved pricing of gas from new wells at a 20% premium over the regulated price, said Arya Patel, research analyst at Emkay Global Financial Services. 

Shares of energy and power sector companies were also among the major gainers today, with those of Coal India and NTPC becoming some of the top gainers in the Nifty 50 index. India's power demand has been very robust and the June quarter earnings of most of the power companies were also good, improving the investor sentiment in this space, a research analyst who covers the sector with a domestic brokerage said. Further, India's power demand will likely grow at about 6% annually over the next three-to-four years, CRISIL Ratings said, according to a report by CNBC TV-18 today. 

Shares of metal companies saw some buying interest today after a sell-off seen last week. Most metal stocks were under pressure last week after the Supreme Court order, which allowed states to levy tax on the mining of minerals and metals with a retrospective effect all the way back to 2005.

However, Kotak Institutional Equities on Friday said this will have only a marginal impact on companies under its coverage. "The demand raised by states under different laws could be further litigated based on merits on a case-to-case basis. A few companies, for instance, Hindalco, have not received any demand whereas the disclosed contingent liability of a few, like TATA (Tata Steel), could include interest and penalties, which is not admissible," the brokerage said. 

On the downside, shares of banks and automobile companies were the major laggards in the market today. Investor sentiment around the automobile sector remained weak as the outlook for passenger and commercial vehicles remains muted currently as inventory continues to build up, Seth of IndSec Securities said. The onset of the festival season and retail sales will be keenly monitored in this space, Seth added. Shares of Mahindra & Mahindra, Bajaj Auto, and Tata Motors ended in the red today. 

Domestic investors booked profits in banking stocks, while foreign investors have bought them today, Shreyansh V. Shah, research analyst at StoxBox, said. "Despite intense competition among banks and challenges in attracting CASA (current and savings account) deposits, we anticipate sectoral deposit growth to pick up from the coming quarters," Axis Securities, said in a report today. However, the brokerage expects credit growth to continue to outpace deposit growth, with banks exercising caution around pursuing aggressive growth in the unsecured segment. 

Owing to the fall in shares of banking and automobile companies, the Nifty Auto, Nifty Private bank, Nifty Bank, and Nifty Financial Services were the sectoral indices which ended lower today. On the upside, the Nifty Metal, Nifty Oil & Gas, and Nifty Energy were the best performing sectoral indices. 

Shares of Shriram Finance hit a record high of 3,085 rupees after brokerage firm HSBC reportedly raised the target price of the stock to 3,600 rupees from 3,340 rupees earlier and maintained its "buy" rating. The brokerage said the company is in its most convincing operating period in over a decade due to strategic clarity and healthy metrics, as per various media reports.

Shares of Caplin Point Laboratories rose to a record high of 1,900 rupees after Brazil's health regulator, Agncia Nacional de Vigilncia Sanitria, concluded an inspection of a manufacturing facility of its arm--Caplin Steriles--in Tamil Nadu, with zero observations. This was the top gainer among NSE 500 shares.

* Of the Nifty 50 stocks, 30 rose and 20 fell

* Of the Sensex stocks, 18 rose and 12 fell

* On the NSE, 1,975 stocks rose, 758 fell, and 105 were unchanged

* On the BSE, 2,710 stocks rose, 1,316 fell, and 139 were unchanged

* Nifty Metal: up 1.9%; Nifty Oil & Gas: up 1.5%; Nifty Auto: down 0.9%

BSE                                               NSE
Sensex: 80424.68, down 12.16 pts                  Nifty 50: 24572.65, up 31.50 pts or 0.1%

End

Edited by Manisha Baxla

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