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Informist, Friday, Aug 30, 2024

By Noel John

MUMBAI – Benchmark indices ended the last trading session of August at record highs, led by gains in financial services and healthcare stocks. The Nifty 50 extended gains for the 12th straight session and the Sensex has risen for the ninth straight session. Both the Nifty 50 and the Sensex gained 4.5% and 2.4%, respectively.

In August, the Nifty 50 and Sensex have only risen 1.1% and 0.8% respectively, due to the sell-off seen earlier this month owing to the unwinding of the yen carry trade and fears of recession in the world's largest economy. Today, the Nifty 50 and the Sensex closed 0.3% higher each at 25235.90 points and 82365.77 points, respectively. The 50-stock index is now expected to find resistance around 25500–25600 points, while the support is seen at 24980–24950 points. 

The Nifty 50 is expected to reach 26820 points within the next 12 months, brokerage house Prabhudas Lilladher said in a report today. The brokerage has raised the Nifty's target level from 26398 points due to strong liquidity as domestic inflows have far exceeded inflows from foreign institutional investors. Prabhudas Lilladher expects investors to move towards defensive sectors such as consumer, durables, building materials, information technology services, pharmaceuticals, and telecom, given the rich valuations in some growth sectors.

Shares of healthcare and pharmaceutical companies were the top gainers today. Cipla, Divi's Laboratories, and Dr Reddy's Laboratories were among the major gainers in the Nifty 50, helping the index end at record closing highs. "Although Cipla, Divi's Laboratories, and Sun Pharmaceutical Industries are among the top gainers in Nifty, we believe Cipla still holds further upside potential," Deepika Murarka, lead research analyst at Choice International said. However, Divi's Laboratories and Sun Pharmaceutical Industries appear fairly valued at their current prices, Murarka said.  

Pharmaceutical companies have done well on the back of benign inputs, stable US prices, and positive domestic demand, Prabhudas Lilladher said in a report today. Hospitals reported strong growth and margin expansion led by higher average revenue per occupied bed, even in a lean season, the brokerage added.

Shares of financial services companies were among the top gainers, with those of Bajaj Finance and Bajaj Finserv becoming two of the top gainers in Nifty 50 index. Financial sector stocks have not seen any significant upmove in the recent past compared to broader markets, Ruchit Jain, lead research analyst at 5paisa, said. "Buying interest is now seen in selective stocks in this sector due to a favourable risk reward ratio," Jain said.

Bajaj Finance and Bajaj Finserv extended gains from Thursday. A fund-raise of 70 bln rupees through Bajaj Housing's initial public offering is likely to be a catalyst for Bajaj Finance's re-rating, Anand Rathi Share and Stock Brokers said in a report today. "Bajaj Finance is on track to achieve its medium-term targets and keep gaining market share with high growth, deeper product penetration and unmatched execution skills," the brokerage said. Further, the recent correction in the share price offers an attractive entry point, the brokerage said.

Anand Rathi Share and Stock Brokers has a target price of 8,330 rupees for the stock. Today, shares of Bajaj Finance ended 1.9% higher at 7,200.15 rupees. "The stock has ended a nearly three-year-long consolidation phase, with a breakout from a triangle pattern, and is now all set to test 7,350-7,600 (rupee) levels," Ajit Mishra, senior vice president of research at Religare Broking, said.

Shares of sugar refiners and ethanol producers ended higher after the government rolled back restrictions on the use of sugarcane juice and sugar syrup for ethanol production. Shares of Triveni Engineering & Industries, Shree Renuka Sugars, Balrampur Chini Mills, Dhampur Sugar Mills, and Dalmia Bharat Sugar and Industries were among the major gainers. The food ministry, after market hours Thursday, said sugar mills and distilleries could now freely divert sucrose from all sugarcane-based feedstocks for ethanol production in the upcoming ethanol supply year 2024-25 (Nov-Oct).

The latest announcement is expected to improve revenue mix and cash flows for sugar companies, analysts said. However, the upside for these sugar stocks is limited as their valuations are slightly stretched in comparison to their historical numbers, Shailesh Kanani, fundamental equity research analyst at Centrum Broking, said.

Shares of Hero MotoCorp ended 1.5% higher to become one of the top gainers in the Nifty 50. The stock rose after brokerage firm Macquarie raised the stock's target price to 5,967 rupees from 5,877 rupees, according to media reports. The brokerage has also maintained its 'outperform' rating on the stock. Macquarie noted that two-wheeler growth remains on the fast track, and it continues to believe that two-wheelers will lead growth in 2024-25 (Apr-Mar), as per a post by ETNow on social media platform X. 

Shares of Bharti Airtel also ended 1.5% higher after brokerage firm Bernstein reportedly raised the stock's target price to 1,740 rupees from 1,600 rupees earlier. The stock extended gains for the eighth straight session and has risen nearly 10% during the period. "Long-term risk reward remains attractive in a consolidating market structure with a revenue and earnings upgrade cycle," the brokerage said, as per an article by ET Now.

Shares of Paytm's parent company, One97 Communications, extended gains from Thursday and became the top gainer in the Nifty 200. The stock rose on Thursday after Paytm Payments Services received approval from the government for downstream investment from One97 Communications. Ventura Securities expects the stock to more than double to 1,170 rupees over the next 24 months. With a clear focus on enhancing its core payment services and expanding into financial services, Paytm is well-positioned to capitalise on the growing digital economy, Ventura Securities said in a report on Thursday. 

Shares of One97 Communications ended 12.2% higher at 621.90 rupees. "We don't suggest a fresh entry around current levels and existing long positions can be held with trailing stop loss," said Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market. The analyst expects the stock to face an immediate resistance at 660 rupees. 

* Of the Nifty 50 stocks, 37 rose and 13 fell

* Of the Sensex stocks, 22 rose and 8 fell

* On the NSE, 1,614 stocks rose, 1,108 fell, and 88 were unchanged

* On the BSE, 2,221 stocks rose, 1,709 fell, and 115 were unchanged

* Nifty Realty: up 1.8%; Nifty Pharma: up 1.5%; Nifty Media: down 0.4%

BSE                                               NSE
Sensex: 82365.77, up 231.16 points or 0.3%        Nifty 50: 25235.90, up 83.95 points or 0.3%

End

Edited by Ashish Shirke

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