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Informist, Thursday, Aug 22, 2024

By Noel John

MUMBAI – The benchmark indices ended higher today after remaining steady for most of the session. The Nifty 50 index extended gains for the sixth straight session, gaining nearly 3% during the period. The rise in the domestic indices was supported by gains in their global counterparts. The US market ended higher on Wednesday after the minutes of the US Federal Open Market Committee raised expectations of a rate cut by the US Federal Reserve in September. 

The Nifty 50 and the Sensex ended 0.2% higher each at 24811.50 and 81053.19 points, respectively. Analysts expect the indices to consolidate after the recent rally. "...considering a one-way rally from the past 5 sessions, a pullback can be anticipated where the (Nifty 50) Index will find support at 24720 (points)," Aditya Gaggar, director of Progressive Shares, said in a note today. The resistance for the 50-stock index is pegged at 25000 points.

"The resilience shown by the equity markets have surprised a lot of seasoned market participants also. In the near term, the mixed global cues would continue to weigh on the market," Motilal Oswal Financial Services said in a report today. The Indian economy is on a multi-year upcycle on the back of multiple engines of growth, the brokerage said. A rising allocation to infrastructure spending and the upturn in real estate and private sector capital expenditure would support a strong growth in the economy over the next 4-5 years, the brokerage said. 

According to Motilal Oswal, the earnings of Indian companies are also expected to show mid-double-digit annual returns over 2024-25 (Apr-Mar) and 2025-26. Among the broader market indices, the small-cap index is trading at more than 40% premium to large-cap index now, the brokerage said. "Hence, the risk-reward looks favourable for large-cap stocks compared to small/microcap stocks and investors need to readjust their portfolios accordingly," the brokerage added.

Equity indices across the globe were mostly up as investor sentiment improved after the Fed minutes showed officials are of the view that it would be appropriate to ease monetary policy if economic data remains in line with expectations. "The recent Federal Reserve minutes highlight a pivotal moment for investors, especially in emerging markets like India. Investors would breathe a sigh of relief, as these anticipated cuts could provide a significant tailwind for economic growth and boost investor confidence," Dhawal Ghanshyam Dhanani, fund manager at SAMCO Mutual Fund, said in a note today.

Back home, gains in the indices were primarily led by shares of banks, select metals, and automobile companies. Shares of Grasim Industries, Tata Steel, ICICI Bank, and Hero MotoCorp were among the major gainers in the 50-stock index. On the downside, shares of select information technology, power, and some automobile companies fell the most.

Shares of automobile companies are seeing fresh buying as two-wheeler sales in the month of August are expected to be good, and the upcoming festive mood is also hinting at growth in the rural segment, Saral Seth, vice-president of institutional equities at IndSec Securities and Finance Ltd, said. Expectation of better rural demand owing to the festival season is also reflected in the shares of fast-moving consumer goods stocks, Seth added.

Further, investors are buying shares of banks as the expectation of a likely rate cut in the US and subsequently in India are driving sentiment, Seth added.

Shares of banks were volatile in the previous couple of sessions. The volatility is due to some repositioning of portfolios by foreign institutional investors, Shreyansh V. Shah, research analyst at StoxBox, said. 

Grasim Industries was the top gainer in the Nifty 50 index. The stock ended 2.6% higher. Broking firm Prabhudas Lilladher's lead research analyst Tushar Chaudhari said investor sentiment towards the stock has improved after Aditya Birla Group Chairman Kumar Mangalam Birla on Tuesday said he is confident of achieving 100 bln rupees in revenue from the paints business within three years of full-scale operations.

According to market buzz, Grasim is also expected to benefit from the Directorate General of Trade Remedies recommending an anti-dumping duty on epichlorohydrin imported from China, South Korea, and Thailand. Epichlorohydrin is used in the production of glues, plastic, glycerols, and resins, as well as in paper reinforcement and water purification. Grasim produces epichlorohydrin and is setting up another plant. The plant is expected to be completed in 2024-25 (Apr-Mar), according to Grasim's 2023-24 annual report.

In reaction to the proposed anti-dumping duty, shares of fertilisers and chemical companies also gained today. Investors expect the government to impose anti-dumping duty on more products imported into India, Swarnendu Bhushan, co-head of research at Prabhudas Lilladher, said. Deepak Fertilisers & Petrochemicals Corp is the only manufacturer of isopropyl alcohol in the country. Shares of the company ended 1% higher, while those of Fertilizers & Chemicals Travancore ended 6.3% higher.

Shares of Kalyan Jewellers ended 9.5% higher. The stock was the top gainer in the Nifty 200 index. One of its promoters, Trikkur Sitarama Iyer Kalyanaraman, has signed an agreement to buy 24.3 mln shares of the company from Highdell Investments, which represents a 2.36% stake, for 13 bln rupees.

Shares of InterGlobe Aviation ended 4.3% higher after brokerage firm Jefferies upgraded the stock to 'buy' from 'hold' and raised its target price to 5,225 rupees from 4,400 rupees. 

On the downside, shares of Zomato and One97 Communication ended lower, shedding the gains made in the first half of the session. On Wednesday, Zomato purchased Paytm's movies and events ticketing business for 20.5 bln rupees. "The transaction is expected to further strengthen the balance sheet for Paytm and will enable the company to focus on its core payment and financial business," Motilal Oswal Financial Services said in a report.

* Of the Nifty 50 stocks, 25 rose and 25 fell

* Of the Sensex stocks, 17 rose and 13 fell

* On the NSE, 1,744 stocks rose, 1,008 fell, and 77 were unchanged

* On the BSE, 2,451 stocks rose, 1,513 fell, and 89 were unchanged

* Nifty Consumer Durables: up 0.9%; Nifty PSU Bank: up 0.7%; Nifty Energy: down 0.6%

BSE                                               NSE
Sensex: 81053.19, up 147.89 pts or 0.2%           Nifty 50: 24811.50, up 41.30 pts or 0.2%

End

Edited by Deepshikha Bhardwaj

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