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Informist, Friday, Aug 23, 2024

By Noel John

MUMBAI – Frontline indices ended marginally higher today after moving in a narrow range as losses in information technology stocks were offset by gains in automobile stocks. The Nifty 50 index has now extended its winning streak to seven sessions, while the Sensex extended gains for the fourth straight session. 

Today, the Nifty 50 ended 0.1% higher at 24823.15 points and the Sensex ended marginally higher at 81086.21 points. "For the past few sessions, indices have been trading in a very narrow range. Technically, the Nifty 50 index has entered the resistance zone of 24800–25000 levels and is finding it difficult to move higher," Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market, said. The support for the index is pegged at 24650 points. 

After a fabulous rally seen in the previous few sessions, domestic equity indices are consolidating ahead of the monthly expiry next week, Sunny Agrawal, head of fundamental equity research at SBI Securities, said. Investors are now awaiting the speech of US Federal Reserve Chairman Jerome Powell at the Jackson Hole meeting later today to get cues on the rate cut trajectory in the US, Agrawal added. 

Gains in shares of automobile companies helped the benchmark indices to end in the green today. Shares of Bajaj Auto, Tata Motors, Hero MotoCorp, and Mahindra & Mahindra were among the top gainers in the Nifty 50 index. Shares of Bajaj Auto and TVS Motor Co hit their respective all-time intraday highs of 10,444.35 rupees and 2,818 rupees. Both the stocks rose sharply after positive comments from foreign brokerages. 

Shares of Bajaj Auto rose sharply, extending gains for the fourth straight session, after JP Morgan raised the stock's target price by 8% to 11,225 rupees. The brokerage highlighted the company's strengths, including robust free cash flow to profit after tax conversion, and strategic investments in electric vehicles and new power-train technologies, as per various media reports.  

JP Morgan expects the company to grow at a compounded annual growth rate of 20% from 2023-24 (Apr-Mar) to 2026-27 and maintain a high payout ratio of 90%. "Bajaj Auto witnessed a bullish breakout on charts, and it is all set to test 10,600 (rupees) and higher levels in the immediate near term," Kumar of Globe Capital Market said. 

JP Morgan also raised the target price of TVS Motor Co by 32% to 3,050 rupees as the company's retail market share has remained resilient despite a resurgence in Honda as well as aggression in electric vehicles by Ola. Brokerage firm UBS also raised the target price for TVS Motor by 200 rupees to 3,200 rupees, according to media reports. UBS believes the newly launched Jupiter 110 will further lead to 15,000-20,000 additional volumes, as per a post by CNBC-TV18 on social media platform X.

According to JP Morgan, the two-wheeler industry has outperformed other segments with an 18% growth rate so far in 2024-25. The brokerage is constructive on the sector owing to healthy inventory levels and easier financing, as per reports. It does not anticipate any margin pressure for the listed players from rising electric vehicle sales as that is happening at a gradual pace. 

Most managements of automobile companies have noted that a normal monsoon and the upcoming festival season are expected to boost volumes following a subdued June quarter, Motilal Oswal Financial Services said in a report today. The two-wheeler segment is anticipated to outperform other segments, according to the brokerage.

Owing to the rise in shares of automobile companies, the Nifty Auto index ended 1.1% higher at 25850.70 points, becoming the best performing sectoral index. The index is now expected to extend gains to 26500 points with support at 25300 points, Brijesh Ail, head of technical and derivatives at IDBI Capital Markets & Securities, said.  

Shares of Sun Pharmaceutical Industries ended 1.4% higher, becoming one of the top gainers in the 50-stock index. Towards the end of the session, the company announced the launch of tedizolid phosphate tablets in a 200 mg dosage in India, marketed under the brand name Starizo. This drug is indicated for the treatment of acute bacterial skin and skin structure infections, according to an exchange filing by the company. 

Shares of Central Depository Services India rose sharply and ended 8.5% higher today after they traded ex-date for its bonus issue. The record date for the bonus shares is Saturday, when the market is closed. The bonus shares will be issued to the shareholders of the company in the ratio of 1-for-1, the company had informed the exchange earlier. 

Shares of FSN E-Commerce Ventures, which owns the brand Nykaa, ended 7.8% higher and became the top gainer among Nifty 200 stocks. The stock rose after two large deals totalling 40.9 mln shares, or 1.4% stake, of the company took place on the BSE during the morning block deal window. According to multiple media reports, one of Nykaa's pre-initial public offering investors--Harindarpal Singh Banga--likely sold a stake in the beauty and personal care platform. The details of the large deal will only be available after market hours today. Media reports said Banga and his wife aimed to offload their stake at a floor price of 198 rupees per share. 

Shares of information technology companies were the worst performers, with those of Wipro, LTIMindtree, Infosys, and Tata Consultancy Services becoming the major laggards in the 50-stock index. IT stocks have recovered substantially in the last one quarter and now there is not much scope for their rise in the short to medium term, Chokkalingam G., founder of Equinomics Research, said. "They have been posting mostly single digit growth in revenues and profits over the last several quarters," Chokkalingam said. 

The management teams of various IT companies continue to exercise caution regarding the near-term demand outlook, as the demand for discretionary projects remains unchanged compared to previous quarters, Motilal Oswal said in a report today. However, banking and financial services clients in the US experienced a slight recovery in discretionary spending in the June quarter, the brokerage added. 

* Of the Nifty 50 stocks, 21 rose and 29 fell

* Of the Sensex stocks, 15 rose and 15 fell

* On the NSE, 1,317 stocks rose, 1,399 fell, and 79 were unchanged

* On the BSE, 2,064 stocks rose, 1,877 fell, and 107 were unchanged

* Nifty Auto: up 1.1%; Nifty Realty: down 2.4%; Nifty Media: down 1.3%

BSE                                               NSE
Sensex: 81086.21, up 33.02 or 0.05%               Nifty 50: 24823.15, up 11.65 or 0.04%

End

Edited by Saji George Titus

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