More Stories

Informist, Tuesday, Sep 10, 2024

By Anjana Therese Antony

MUMBAI – The Indian equity market indices will likely see another session of gains on Wednesday, extending the upward journey for the third straight session. But the caution ahead of the US inflation data for August, due Wednesday, may cap the gains, analysts said. The data is likely to throw some light on the quantum of reduction in rates, an action now widely expected by global investors. The US Federal Reserve is scheduled to announce its decision on interest rates next week.

While the expensive valuation of Indian equities could put a cap on the market's upside in the short term, analysts believe the medium-to-long-term growth story will be better, owing to India's robust economic growth prospects. However, there are also views that India's economic growth could be slower than expected in the current financial year, causing downside risks to growth forecasts, a research analyst at a domestic broking firm said.

"On one side, we have better rural demand trends, government capex, and slowing inflation, while on the other, discretionary demand remains soft and geopolitical tensions in the Middle East (West Asia) are unsettled," the analyst said. 

Today, headline indices recovered from early losses and closed higher. The Nifty 50 and the BSE Sensex closed 0.4% higher each at 25041.10 points and 81921.29 points, respectively. The support for the 50-stock index is pegged at 25000-24950 points and resistance at 25150-25200 points for the near term. The extended fall of the volatility index India VIX also hinted at the ease in near-term nervousness in the market. The fear gauge closed over 6% lower at 13.3600. 

Analysts also said investors are considering periodic corrections as an opportunity to buy undervalued stocks in the broader space. Today, the Nifty Midcap and Nifty Smallcap indices outperformed benchmark indices and closed 1% higher each. 

Among the sectors, pharmaceutical stocks are likely to rise more on the back of the Biosecure Act passed in the US. This Act restricts US federal agencies from doing business with China-based major pharma players due to national security, which could benefit Indian companies. Today, Nifty Pharma closed 1.1% higher and was the third-most sectoral gainer, with most constituents in the green.

"We expect a slight uptick in growth for the Indian pharma market in FY25 (2024-25) compared to FY24 (2023-24) levels. Volume growth might accelerate albeit with moderate price increases," Elara Capital said in a report today. The broking firm also reiterated that organic growth will be "in the range of 11-14% for pharma stocks but fall short of our expectations", which presents a potential risk, particularly for companies reliant on the domestic business for overall profit.

The information technology pack, too, is likely to extend gains to the next session, owing to the anticipation of a rate cut in the US this month, analysts said. While the demand environment for the current financial year is not expected to show major changes, the scenario is anticipated to improve from the next fiscal year, they said. Today, Nifty IT was the second-highest sectoral gainer after Nifty Media and closed 1.7% higher with all constituents in gains. 

Meanwhile, the initial public offering of Bajaj Housing Finance will close on Wednesday. The company's offer comprises a fresh issue of shares worth up to 35.6 bln rupees and an offer for sale of up to 30 bln shares.

Edited by Saji George Titus

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.