More Stories

Informist, Monday, Sep 23, 2024

By Anshul Choudhary

MUMBAI – Domestic benchmark indices continued to rise to fresh lifetime highs on hopes of better foreign flows into India after the US Federal Reserve cut interest rates last week. Further, the Reserve Bank of India is expected to soon follow the US Fed with rate cuts in the coming months, which is also driving stock prices up.

"Whenever Fed cuts rates in a non-recessionary environment, India has largely outperformed... India has growth prospects and a stable political environment... our weightage in MSCI index is also increasing, we are bound to get flows," Sanjeev Hota, head of research at Sharekhan, said.

Expectations of lower interest rates in India have been driving shares of automobile and real estate companies higher in the past few sessions and that sentiment persisted today as well. Shares of banks and other financial services companies rose on hopes of better liquidity in the financial system once rate cuts materialise in India. Further, valuations of private banks and non-banking financial services are relatively better than a large part of the market, analysts said.

The Nifty 50 crossed 25900 points for the first time today and rose 0.6% to close at 25939.05 points--its highest closing level yet. The Nifty 50 has risen for three straight sessions, since the US Fed cut rates, gaining over 2% during this period. The Sensex also ended at its lifetime closing high of 84928.61 points today.

These strong gains were driven by increased buying from foreign investors. They had net bought equities worth over 140 bln rupees Friday, which meant foreign institutional investors have net bought Indian equities worth nearly 337 bln rupees this month--already higher than that seen in the previous three months. Today's provisional data of flows from foreign investors will come later today.

Automobile stocks were the major gainers as hopes of lower interest rates in India led to fresh demand for shares of passenger vehicle makers. Lower interest rates are expected to make financing of cars more affordable, which may boost demand, analysts said.

Shares of car-maker Mahindra & Mahindra have outperformed two-wheeler makers such as Hero MotoCorp and Bajaj Auto in one week. Today, shares of Mahindra & Mahindra and Bajaj Auto rose 3.3% each, and those of Hero MotoCorp rose nearly 3%. Sentiment around shares of M&M were positive after brokerage Goldman Sachs retained its 'buy' rating, citing the company's strong product pipeline in the electric vehicle segment and hopes of better tractor sales as rural demand is expected to improve.

Shares of banks and other financial companies were also among top gainers, with SBI Life Insurance, State Bank of India, and HDFC Life Insurance gaining 2.3-2.7%. Shares of public sector banks saw fresh demand after witnessing a correction for nearly two months. The Nifty PSU Bank rose 3.4% today, with shares of Bank of Maharashtra gaining over 8%. Despite today's gains, the index is still down 7.3% since the start of August. 

Among others, sentiment around private banks was also positive with the Nifty Private Bank index gaining for eight straight sessions. Shares of oil exploration companies saw some respite and gained as Brent crude oil futures rose to about $75 per barrel from the lows of $70 per bbl two weeks back. Crude futures have risen recently due to lower production in the US and hopes of better demand post rate cuts in the US. Most of the fast-moving consumer goods companies moved higher on hopes of better rural demand, while profit-booking continued in shares of information technology companies. IT stocks had witnessed sharp gains earlier in anticipation of a rate cut in the US. Nifty IT was the only sectoral index that fell today.

Positive sentiment around flows helped broader market indices outperform benchmark indices. The Nifty Midcap 150 rose 0.8% and the Nifty Smallcap 250 gained 0.9%. Apart from public sector banks, real estate companies were among the gainers within the mid- and small-caps space. Shares of Godrej Properties rose nearly 7% today.

Within small-caps, shares of SBFC Finance rose nearly 20% after the rating agency ICRA upgraded the rating on the financier's long-term bonds worth up to 21 bln rupees to "AA-" from "A+". The stock was up for the sixth straight session. Shares of Amber Enterprises rose 15%, and those of VIP Industries rose nearly 12%. Among losers, Shares of Concord Biotech closed 8.4% down.

* Of the Nifty 50 stocks, 34 rose and 16 fell

* Of the Sensex stocks, 19 rose and 11 fell

* On the NSE, 1,768 stocks rose, 1,066 fell, and 73 were unchanged

* On the BSE, 2,382 stocks rose, 1,731 fell, and 120 were unchanged

* Nifty PSU Bank: up 3.4%; Nifty Realty: up 2.2%; Nifty IT: down 0.5%

BSE                                               NSE
Sensex: 84928.61, up 384.30 points, or 0.5%       Nifty 50: 25939.05, up 148.10 points, or 0.6%

End

US$1 = 83.55 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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.