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Informist, Friday, Sep 13, 2024

By Anshul Choudhary

MUMBAI – After rising sharply on Thursday, the benchmark indices closed marginally lower today but still ended 2% higher in weekly terms. Most of the gains this week came on Thursday when investors covered their short positions on account of expiry of derivative contracts.

The Nifty 50 index closed 32.4 points or 0.1% lower at 25356.50 points and the Sensex ended down 71.77 points at 82890.94 points.

Investors cheered economic data from the US, which bolstered the view of at least a 25-basis-point interest rate cut by the US Federal Reserve at its policy review next week. The decision will be announced on Wednesday.

Lower interest rates are expected to prompt companies in the US to increase spend on information technology, which will likely improve demand for Indian IT companies, shares of which rose this week.

A rate cut by the US Fed may prompt the Reserve Bank of India to follow suit, but not immediately so. If it does cut its key policy rate, it will bring down the overall cost of capital, benefiting banks and non-banking financial services, which have faced margin pressure. Among the Nifty 50 constituents, shares of all private banks and NBFCs posted gains on a weekly basis.

Last week, Brent crude oil prices fell to around $70 per barrel, raising hopes that it would help several sectors that use crude oil as key raw material to limit costs. This led investors to buy shares of fast-moving consumer goods companies and paint makers. However, lower crude oil prices led to a fall in shares of oil exploration companies such as Oil and Natural Gas Corp.

Among the Nifty 50 constituents, Bajaj Auto rose over 8% this week as the Union Cabinet on Wednesday approved a subsidiary scheme to promote electric two-wheelers and three-wheelers. Divi's Laboratories rose 7% after the US House of Representatives passed the Biosecure Act, which restricts US federal agencies from doing business with large pharmaceutical companies based in China. The move is widely expected to benefit Indian pharmaceutical companies that are into contract development and manufacturing. Shares of Bharti Airtel rose 6%.

FMCG companies were among the top gainers, with shares of Britannia Industries, Hindustan Unilever, and Tata Consumer Products rising 3-5% this week. Apart from lower crude oil prices, FMCG companies are expected to benefit from improvement in rural demand in the second half of this financial year. The above-normal monsoon has likely helped with increasing income levels in rural areas which is likely to translate into better demand and higher volumes of FMCG products, analysts said.

Companies in the financial services and banking sectors were the other top performers, with Shriram Finance and Bajaj Finance rising about 4% each this week on hopes of lower interest rates. "Despite delivering healthy growth and maintaining robust asset quality, NBFCs have been overlooked by the market for the past three years. The sector faced margin pressures due to rising capital costs. However, with interest rate cuts anticipated and valuations remaining attractive, NBFCs now present a better risk-reward ratio," Krishna Appala, senior research analyst at Capitalmind Research, said in a note.

Shares of metal companies rose this week, with most of the gains coming in the last two days after media reports said China may reduce its mortgage rates by 50%. This is likely to boost the country's property sector and improve demand for metals from Indian companies. Shares of JSW Steel rose 2.3% this week, and those of Tata Steel rose 1.5%.

On the other hand, shares of Tata Motors fell 5.5% on weak outlook for their passenger vehicles in India and the UK. The company this week announced price cuts of some entry-level cars and base variants of sport utility vehicles, which analysts said was being done to clear inventories. Analysts said inventory levels of Tata Motors were among the highest in the industry.

Within the broader market, the Nifty Smallcap 250 index rose over 1% this week but underperformed the Nifty 50. At the same time, the Nifty Midcap 150 rose 2.4%. Among the top 500 companies on the National Stock Exchange, shares of Jubilant Pharmova and Century Textiles & Industries were the top performers, gaining 25%, and 20%, respectively.

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

* Of the Sensex stocks, 13 rose and 27 fell

* On the NSE, 1,779 stocks rose, 1,015 fell, and 75 were unchanged

* On the BSE, 2,454 stocks rose, 1,517 fell, and 96 were unchanged

* Nifty Realty: up 1.7%; Nifty Media: up 1.7%; Nifty FMCG: up 0.7%

BSE                                               NSE
Sensex: 82890.94, down 71.77 points, or 0.1%      Nifty 50: 25356.50, down 32.40 points, or 0.1%

End

Edited by Ashish Shirke

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