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Informist, Tuesday, Aug 27, 2024

By Noel John

MUMBAI – The Nifty 50 and the Sensex came off highs and closed marginally higher as investors booked profits when the benchmark indices rose to near all-time high levels, analysts said. However, the Nifty 50 index managed to close at a record high of 25017.75 points, up 7.15 points. Gains in shares of financial services, pharmaceuticals, and select information technology companies were offset by losses in fast-moving consumer goods and oil companies.

The Nifty 50 was merely 5 points away from its all-time high of 25078.3 points, when profit booking set in. The Sensex ended at 81711.76, up 13.65 points from the previous close. "Trading session lacked momentum due to weak investor participation on account of Janmastami, and ended almost unchanged from its previous close. Weak US market cues and subdued Asian indices prompted local investors to book profit towards the fag-end, indicating that intraday volatility will continue amid growing geopolitical tensions and sluggish global growth," said Prashanth Tapse, senior vice president of research at Mehta Equities, in a note today.

The broader 50-stock index is now expected to face resistance at 25100 points, followed by 25500 points, while the support is pegged at 24750–24500 points, said Ajit Mishra, senior vice president of research at Religare Broking, said. "Going forward, the street will keenly wait for the outcome of the Reliance Industries' annual general meeting. In addition, the monthly expiry on Thursday may lead to continuity in the volatility," Sunny Agrawal, head of fundamental equity research at SBI Securities, said.

According to derivatives analysts, investors continued to roll over long positions to the September futures of the Nifty 50, ahead of the expiry of the August derivatives series on Thursday. Rollovers to the Nifty 50's September contract were 31.23% of total positions on Monday, lower than three-month average of 32.80%, Axis Securities said in a report today.

Shares of financial services companies, which were among the top losers early in the day, recovered to become the best market performers. Shriram Finance, SBI Life Insurance Co, Bajaj Finserv, and Bajaj Finance were among the top gainers in the Nifty 50 index.

The banking, financial services, and insurance sectors, which are closely tied to the broader economy, are currently seeing positive momentum due to the strong performance of the Indian economy, Shreyansh V. Shah, research analyst at StoxBox, said.

Although banking and financial services companies experienced some seasonal softness in the June quarter, the guidance from key players in the sector remains optimistic, Shah said. "This positive outlook is underpinned by factors such as strong credit demand, improving asset quality, and ongoing investments in digital transformation. These elements suggest that the sector is well-positioned to capitalise on the current economic momentum, driving sustainable growth in the coming quarters," Shah added. 

Further, the Reserve Bank of India has come up with a technological platform called Unified Lending Interface to speed up disbursal of credit, especially to rural and smaller borrowers, which is positive for banks and financial services companies, Saral Seth, vice president of institutional equities at IndSec Securities, said.

Shares of select information technology companies extended gains from Monday, with Infosys being one of the major gainers in the Nifty 50 index. IT stocks rose on Monday after comments by US Federal Reserve Chair Jerome Powell on Friday increased expectations of a recovery in demand from the banking, financial services, and insurance segment in the US. "Nifty IT Index resumed its structural uptrend after two years of consolidation and is expected to extend the rally in coming quarters. Within large companies, Infosys is on verge of breakout from eleven quarters range indicating acceleration of upward momentum and fresh entry opportunity," ICICI Direct Research said in a report today. 

Shares of pharmaceutical companies were also among major gainers, with those of Sun Pharmaceutical Industries, Dr Reddy's Laboratories, and Cipla being some of the top gainers in the Nifty 50 index. The sector is looking strong at this level and we expect it to start delivering good results from Oct-Mar, said Deepika Murarka, lead research analyst at Choice International. "Most of the companies we cover should see improvements in both revenue and margins. By the end of FY25 (2024-25), we anticipate significant returns in healthcare companies," the analyst added. 

On the downside, shares of FMCG and metal companies were the worst performers. Owing to this, the Nifty FMCG index and Nifty Metal index were among the few sectoral indices that ended in the red. Investors are booking profits in FMCG stocks as most of the stories have already been discounted at current levels, said Onkar Kelji, research analyst with IndSec Securities and Finance.

Shares of Hindustan Unilever, JSW Steel, Hindalco Industries, and ITC were among the worst performing FMCG and metal companies. "We are staying away from metals as we don't think the cyclical story is exciting right now," Deepak Shenoy, founder of Capitalmind, told CNBC-TV 18 today.

Among stocks, Larsen & Toubro ended 1.7% higher at 3,702.70 rupees and was one of the top gainers in the Nifty 50 index. The stock is expected to touch 4,020 rupees as the company's order inflows are largely on track, said Arafat Saiyed, vice president of InCred Capital. The company's topline is expected to grow 12-14% in 2024-25, Saiyed said. Of the 9-trln-rupee order pipeline from government and private players, the company is expected to bag 20-25% of the orders from bidding processes for the rest of the financial year, Saiyed said. Further, the capital goods sector has also seen strong re-ratings recently as private capital expenditure is back on track, along with government capital expenditure, Saiyed added.

Shares of Zee Entertainment Enterprises rose sharply and ended 11.6% higher after the company said it has entered into a settlement agreement with Culver Max Entertainment Pvt Ltd, which operates in India as Sony Pictures Networks India, and Bangla Entertainment Pvt Ltd, to settle all disputes related to the merger cooperation agreement and the composite scheme of arrangement. The three companies have arrived at a comprehensive non-cash settlement, according to a press release by Zee Entertainment. 

Zee Entertainment said that the companies have mutually agreed to withdraw all claims against each other, in the ongoing arbitration at the Singapore International Arbitration Centre, and all related legal proceedings initiated in the National Company Law Tribunal and other forums. The companies will also withdraw the respective composite schemes of arrangement from the National Company Law Tribunal.

Shares of Tata Investment Corp and Tata Elxsi were the top gainers in the Nifty 500 index. Tata Investment Corp witnessed a strong buying interest and crossed a five-month-long congestion zone on the higher side, said Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market. "Going ahead, we expect the stock to trade with positive bias and expect it to test 8,060 levels in near term," the analyst added. Shares of Tata Investment Corp ended 19.5% higher at 7,385.45 rupees.

Shares of the holding companies saw strong buying interest recently as their relative valuations looked attractive at current levels, Kranthi Bathini, director of equity strategy at WealthMills Securities, said while talking about Tata Investment Corp. Tata Investment Corp is a subsidiary of Tata Sons, a holding company of the Tata Group.

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

* Of the Sensex stocks, 10 rose and 20 fell

* On the NSE, 1,526 stocks rose, 1,206 fell, and 84 were unchanged

* On the BSE, 2,150 stocks rose, 1,812 fell, and 89 were unchanged

* Nifty Media: up 4.1%; Nifty Financial Services: up 0.8%; Nifty FMCG: down 1.1%

BSE                                               NSE
Sensex: 81711.76, up 13.65 points                 Nifty 50: 25017.75, up 7.15 points

End

Edited by Akul Nishant Akhoury

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