More Stories

Informist, Monday, Aug 26, 2024

By Anjali Singh

MUMBAI – Headlines indices kicked off the week with sharp gains today on the back of a rise in information technology stocks after the US Federal Reserve Chair Jerome Powell said "the time has come for policy to adjust." Gains in index heavyweights such as HDFC Bank, Reliance Industries, and ICICI Bank helped the indices.

Today, the Nifty 50 and the Sensex closed 0.8% higher each at 25010.60 points and 81698.11 points, respectively. The Nifty 50 closed at over 25000 points, extending gains for the eighth straight session, and just 0.30 points away from its record closing high of 25010.90 points seen on Aug 1. The Sensex rose for the fifth straight session. Going forward, the Nifty 50 is expected to find support at 24850 points and face resistance at 25090 points. Indices opened strong tracking the US market, but profit taking in select index heavyweights capped the further gains, Ajit Mishra, senior vice president at Religare Broking, said.

The Nifty 50 was driven by a broad momentum that included almost all IT stocks. Shares of IT companies such as HCL Technologies, Tech Mahindra, and LTIMindtree closed 1.7-3.5% higher. Nifty IT also closed over 1% higher today. Shares of IT companies gained after Powell's comments as cuts in interest rates would improve corporate and personal lending in the banking, financial services, and insurance segments. This will lead to more spending by them, especially discretionary spending, which has been slow for some time, a research analyst at a domestic brokerage firm said. Green shoots of recovery in demand in Oct-Mar are expected as guided by the IT companies' management in the June quarter, the analyst added. While a major part of IT companies' revenue comes from the US, companies with high exposure to the BFSI segment will benefit more. These companies include Mphasis and Tata Consultancy Services.

India is in a structural bull market with a very strong foundation, Rajesh Bhatia, chief investment officer at ITI Mutual Fund said in an interview with ETNow. The breadth of the current bull market is strong and we are in the early stages of a multiyear economic cycle, Bhatia said. Bhatia believes indices may see some technical corrections along the way but said it will be difficult to time the correction. While there is value in large-cap stocks, India's growth story is panning out in mid- and small-cap sectors, Bhatia added.

Key equity indices around the world were mixed today. Some rose on the back of improved investor sentiment after Powell's comments. If the Fed cuts key rates in September, most central banks are expected to follow suit. However, some indices fell as concern about geopolitical tensions in West Asia emerged again after Hezbollah launched rockets and drones against Israel on Sunday and the latter struck Lebanon with around 100 jets. This led to a rise in oil prices as the conflict was seen leading to a possible supply disruption. At 1743 IST, Brent crude oil futures were up 2.7% to $81.16 a barrel. "While simmering tension in West Asia may continue to keep investors on the edge, India (is) relatively better off compared to other major economies...," said Prashanth Tapse, senior vice-president of research at Mehta Equities, in a note.

Hindalco Industries was the top gainer in the Nifty 50 index. Metal stocks rose today on potential rate cuts by the Reserve Bank of India, amid anticipation of rate cuts by the US Fed, a research analyst who covers the sector said. However, the analyst said the valuations in the sector are frothy. The analyst said there was a greed in the market right now, and investors seemed to be not giving heed to valuations. Gains in Hindalco pushed the Nifty Metal higher, and the sectoral index closed 2.2% higher. 

Shares of ONGC also rose after the company said it has started production at its fifth oil well in the KG-DWN-98/2 block in the Krishna Godavari basin. Production at the well has been initiated using the floating production, storage, and offloading vessel, which allows the company to commence transporting and selling associated gas. ONGC may not achieve the expected level of oil production this financial year, despite the new addition, owing to a decline in production in other old wells, said Swarnendu Bhushan, a research analyst with Prabhudas Lilladher.

On the downside, shares of Apollo Hospitals Enterprise fell over 1% after brokerage firm Nomura downgraded it to 'neutral' from 'buy' as the rise in hospital profitability is expected to be gradual from here on. According to Nomura, there are limited opportunities to expand capacity in existing hospitals. Further, the company's plan to set up greenfield hospitals may be a drag on the earnings before interest, tax, depreciation, and amortisation margin in the near term. Nomura said the current valuation factors improved profitability of the hospital business and rising demand for premium healthcare. Despite this, the brokerage raised the target price to 6,856 rupees from 6,724 rupees.

All the Nifty 50 mid- and small-cap indices closed higher, but underperformed the headline indices. In the Nifty 500 index, JM Financial and Gujarat State Petronet were the best performers, while Zydus Lifesciences and Syrma SGS Technology were the worst performers. Shares of Zydus Lifesciences fell after its Israeli competitor, Teva Pharmaceuticals, received the US Food and Drug Administration's approval for a generic of Asacol HD, an ulcerative colitis treatment drug. This is expected to lead to a decline in sales of the product for Zydus Lifesciences, Citi said, as per CNBC-TV18.

There were also doubts over Zydus Lifesciences' plans of buying stake in Sterling Biotech. Sterling Biotech states that a strategic review of the existing business will be undertaken to produce animal-free products. "This could mean divesting a part of the existing business, in our view," Nomura said in a report. The company is currently engaged in the production of gelatins and active pharmaceutical ingredients. 

Among gainers, KEC International rose after the company bagged new orders worth 10.79 bln rupees for its transmission and distribution, and cable businesses. With this, the company's year-to-date order intake has surpassed 87 bln rupees, reflecting a growth of around 60% compared with the last year. Shares of One97 Communications declined after Moneycontrol reported that its founder Vijay Shkhar Sharma received a showcause notice from the Securities and Exchange Board of India. The show cause notice alleged non-compliance with promoter classification norms. The probe was initiated based on input from the Reserve Bank of India, which had earlier imposed restrictions on the Paytm Payments Bank, it added.

Shares of Interarch Building Products listed today at a premium of over 44% to the issue price of 900 rupees. The stock closed 32.9% higher at 1,195.70 rupees. 

* Of the Nifty 50 stocks, 32 rose and 18 fell

* Of the Sensex stocks, 23 rose, 6 fell and 1 was unchanged

* On the NSE, 1,508 stocks rose, 1,290 fell, and 73 were unchanged

* On the BSE, 2,143 stocks rose, 1,913 fell, and 141 were unchanged

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

BSE                                               NSE
Sensex: 81698.11, up 611.90 or 0.75%              Nifty 50: 25010.60, up 187.45 or 0.76%

End

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.