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Informist, Tuesday, Sep 3, 2024

By Noel John

MUMBAI – Benchmark equity indices ended largely flat after volatile trade in the second half of today's session. This followed a 13-day winning run for the Nifty 50 and a 10-day gaining streak for the BSE Sensex. The Nifty 50 index ended at a record closing high, just over a point higher than its closing level on Monday. While shares of financial services companies were the top gainers today, losses in information technology stocks offset the gains made during the day. 

The Nifty 50 has taken a breather amid concerns regarding expensive valuations, Kranthi Bathini, director of equity strategy at WealthMills Securities, said, adding that indices have been rallying for four straight weeks despite rich valuations due to strong liquidity. "People who save money are investing in equity markets for the long term as the returns here are much better than any other financial instruments," Bathini added. 

The Nifty 50 and the Sensex ended at 25279.85 points and 82555.44 points, respectively. The Nifty 50 index is now expected to face resistance at 25500 points while support is seen at 25000 points. 

Shares of SBI Life Insurance Co, HDFC Life Insurance Co, and Shriram Finance were the top three gainers in the Nifty 50 index. The rise in shares of financial services companies also led the Nifty Financial Services to be among the top sectoral gainers, ending 0.8% higher with 19 of its 20 constituents in the green. The index has extended gains for the fourth straight session, gaining nearly 2% during the period. 

Despite the recent run-up, shares of financial services companies are still fairly cheaper compared to stocks in other sectors, Anand Dama, head of banking and financial services research at Emkay Global Financial Services, said. Further, the vehicle financing segment is expected to see healthy growth in the coming months with the start of the rate cut cycle, Dama said. 

Investors are also moving towards banking stocks these days, Prashanth Tapse, senior vice-president of research at Mehta Equities, said. While other sectors clocked double-digit growth in the last one year, the Nifty Bank index has given returns of only 5-6%, Tapse said. 

In the defence space, shares of most companies gained today due to hope of more orders from the government after the Defence Acquisition Council's meeting today. Mazagon Dock Shipbuilders, Garden Reach Shipbuilders, Hindustan Aeronautics, and Cochin Shipyard were the major gainers in the defence pack. 

After market hours today, the government said it would acquire defence equipment worth 1.45 trln rupees. India Today, citing sources in the ministry, had reported the amount to be 1.3 trln rupees. The report also said the government was set to clear mega projects, including the Indian Navy's 700-bln-rupee plan for seven new warships and the Indian Army's project to induct 1,700 new tanks to replace its Russian-origin T-72 battle tanks. The main contenders for the Navy's project to build the seven new warships included Mazagon Dock Shipbuilders and Garden Reach Shipbuilders and Engineers, as per the report.

The government is in the process of giving a lot of orders to defence companies and the Street now expects more orders for these companies in the coming days, Tapse of Mehta Equities said. However, the upside for these companies is limited due to elevated valuations, Tapse said. The order won by Hindustan Aeronautics has also improved sentiment around the sector, he added. 

On Monday, the Cabinet Committee on Security approved the procurement of 240 aero-engines for Su-30 MKI aircraft from Hindustan Aeronautics for 260 bln rupees. The government will buy these aero-engines for the Indian Air Force and their delivery would start after one year, and would be completed over a period of eight years.

Among specific stocks, Raymond ended over 5% higher after rising over 9% intraday, and was one of the top gainers in the Nifty 500 index. The company's chairman, Gautam Singhania, said Raymond was planning to list its apparel and real estate units by the end of 2025, The Economic Times reported today. 

However, in a clarification to the news item today, the company said it had already intimated to exchanges about the demerger of its lifestyle business to Raymond Lifestyle and its realty business to Raymond Realty. It has also informed exchanges that both entities would be listed on stock exchanges after necessary regulatory approvals. "Therefore, the statement made in the news article merely represents the statement of fact, well available in the public domain," the company said.

As the stock has fully priced in the demerger of its apparel and real estate business, the upside will be capped from here on, Saral Seth, vice-president of institutional equities at IndSec Securities, said. The stock should correct at least 10% from current levels for an ideal entry point, Seth added. 

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

* Of the Sensex stocks, 13 rose and 17 fell

* On the NSE, 1,419 stocks rose, 1,319 fell, and 92 were unchanged

* On the BSE, 1,999 stocks rose, 1,939 fell, and 117 were unchanged

* Nifty Consumer Durables: up 1.3%; Nifty Financial Services: up 0.8%; Nifty Media: down 1.4%

BSE                                               NSE
Sensex: 82555.44, down 4.40 points                Nifty 50: 25279.85, up 1.15 points

End

Edited by Avishek Dutta

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