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Informist, Wednesday, Sep 18, 2024

By Anshul Choudhary

MUMBAI – The Nifty 50 ended lower, losing most of the gains made in the previous two sessions, amid caution ahead of the US Federal Open Market Committee's decision on interest rates later today. Investors were likely cautious about monetary policy commentary, which may acknowledge a slowdown in the US economy. 

Investors mostly booked profits in information technology stocks, which have risen significantly in anticipation of rate cuts in the US. All the Nifty IT constituents declined today, pulling down benchmark indices as well. The Nifty 50 closed at 25377.55 points, down 41 points or 0.2%. The Sensex closed at 82948.23 points, down 131.43 points or 0.2%. Earlier in the day, both Nifty 50 and Sensex had hit intraday lifetime highs of 25482.20 and 83326.38 points, respectively.

"Commentary is important no matter what the quantum of rate cut... whether they (US Fed) talk about future rate cuts or recession will be important," Narendra Solanki, head of fundamentals at Anand Rathi Investment Services, said.

While analysts were hopeful of at least a 25-basis-point rate cut today, they said it was priced into stock prices. This is likely the reason for the Nifty 50 consolidating this month and failing to breach the resistance of 25450-25500 points, which analysts had given at the start of the week. High stock valuations pushed investors to book profits at higher levels and in the run-up to the US FOMC meeting, the Nifty 50 has risen only 0.6% so far this month.

High valuations coupled with uncertainty around the US FOMC meeting pushed investors to book profits in IT stocks. Shares of Tata Consultancy Services, HCL Technologies, and Infosys fell 3-3.5%. Owing to this, Nifty IT fell 3%--its sharpest single-day fall since Aug 5.

As high valuations made investors cautious ahead of a big event, they turned to the financial sector, which provides better valuations than other sectors. Investors flocked to non-banking financials services, which may benefit from lower cost of capital once interest rates come down, and private banks. "These are low-hanging fruits," Alok Churiwala, managing director of Churiwala securities, said.

Shares of Shriram Finance and Bajaj Finance were the top gainers among the Nifty 50 constituents, rising 4.4% and 3.6%, respectively. Shares of index-heavyweight ICICI Bank and HDFC Bank rose 1.6% each. The Nifty Bank ended over 1% higher at 52750.40 points--about 1% below its lifetime high touched in July.

While gains in large-cap indices slowed down this month, gains have slowed down in midcaps from the start of August. High valuations across mid-caps and small-caps affected sentiment negatively, analysts said. The Nifty Midcap 150 and Nifty Smallcap 250 rose 0.7% and 1.7% so far this month.

Within midcaps, shares of BSE posted strong gains in anticipation that its valuation multiples may rise once NSE gets listed. The stock has risen over 34% since the Securities and Exchange Board of India on Friday absolved former NSE officials of the charge of collusion and connivance with broker OPG Securities. Media reports suggested this has likely cleared the way for NSE to get listed soon.

Shares of Torrent Power rose 8.6% after the company on Tuesday said it won an order to supply storage capacity of 1.5 GW from its pumped hydro storage project to Maharashtra State Electricity Distribution Co. The stock ended at its highest closing level of 1,932.90 rupees. 

On the downside, shares of IT and pharmaceutical stocks fell after investors booked profits. Shares of Oracle Financial Services Software and Mphasis declined 5-8% and those of Biocon and Laurus Labs declined 3% each.

* Of the Nifty 50 stocks, 17 rose and 33 fell

* Of the Sensex stocks, 11 rose and 19 fell

* On the NSE, 958 stocks rose, 1,839 fell, and 66 were unchanged

* On the BSE, 1,520 stocks rose, 2,455 fell, and 95 were unchanged

* Nifty IT: down 3.1%; Nifty Pharma: down 1.5%; Nifty Bank: up 1.1%

BSE                                               NSE
Sensex: 82948.23, down 131.43 points, or 0.2%     Nifty 50: 25377.55, down 41.00 points, or 0.2%

End

Edited by Saji George Titus

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