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Informist, Tuesday, Sep 24, 2024

By Anshul Choudhary

MUMBAI – Benchmark indices ended largely unchanged after gaining for three straight sessions. Gains in metal stocks on the back of a slew of measures announced by China to boost its economy helped the Nifty 50 touch a record high today. The gains were, however, offset by a decline in shares of banks and fast-moving consumer goods companies.

Earlier in the session, the Nifty 50 crossed 26000 points for the first time. However, high stock valuations pushed investors to book profits, with the Nifty 50 and Sensex ending flat at 25940.40 and 84914.04 points, respectively.

Indices began the session lower, and entered the negative zone several times during the day. However, strong liquidity in the market helped them to recover. "Historically, people had doubts about our growth, but now, there is no doubt among investors that the Indian economy is growing... Now, I am seeing HNIs, CEOs and CFOs investing very large amounts as SIPs (systematic investment plans) keeping a long-term perspective," Dharmesh Kant, head of equity research at Cholamandalam Securities, said.

Metal stocks witnessed buying interest on hopes that the fresh stimulus announced by the People's Bank of China would help improve demand from the country, which is a major consumer of metals. China will cut the reserve requirement ratio by 50 basis points, may lower its loan prime rate by 0.20-0.25%, and offer loans to funds and brokers to buy Chinese stocks, People's Bank of China Governor Pan Gongsheng said at a press conference today, according to media reports.

Shares of Tata Steel, Hindalco Industries, Vedanta, and NMDC rose about 4% each. Owing to this, the Nifty Metal rose 3% to 9735.40 points, the highest single-day rise in nearly two months.  

Despite measures announced by China, analysts expressed caution and said it would take time and further measures to revive China's economic growth. "... these measures could offer some support to housing market sentiment in the near term, but their sustainability is still in doubt, given that the key roadblock to housing market stabilisation remains elevated inventory...," Morgan Stanley Research said in a note.

Shares of information technology stocks gained in the final hours despite concerns around their high valuations. Shares of Tech Mahindra rose 1.9%, while those of HCL Technologies and Wipro ended 1.3% and 0.9% higher, respectively.

Indices have been regularly touching new highs recently, aided by strong liquidity in the markets and hopes of more interest rate cuts in the US in the coming months. The Nifty 50 has risen over 19% already in 2024, over and above the 20% rise in the previous year.

These sharp gains have made several analysts believe that markets are ignoring fundamentals and future risks. Markets had shrugged off poor earnings in Apr-Jun on hopes that earnings would be better in the second half of this year. However, there are risks to future earnings, considering uncertainty around global and domestic demand, especially in rural areas in India, analysts said. "Everyone knows that earnings will not be great this year, but no one will put out a report because we don't want to lose clients... it won't work in the industry's favour," research head at a domestic brokerage house said, while raising doubt over earnings estimate for this financial year.

Risks to earnings have pushed investors to book profits at higher levels, but such corrections have been absorbed by strong flows from domestic funds. Even today, profit booking was observed in shares of banks, financial services, and select FMCG companies, but was not enough to pull down the overall market.

The broader market was mixed with mid-cap indices up 0.2-0.4%, while small-cap indices fell 0.2-0.8%. Within small-caps, shares of Indian Energy Exchange fell nearly 12% on reports that the government is planning to implement market coupling for power exchanges either by the end of this financial year or at the start of 2025-26 (Apr-Mar). Once implemented, this new model will ensure a uniform price across power exchanges. The move is expected to intensify competition across the three platforms, Indian Energy Exchange, Power Exchange India, and Hindustan Power Exchange, said Onkar Kelji, research analyst at IndSec Securities.

Of the three new listings today, shares of Northern Arc Capital and Arkade Developers rose 23% and 30% respectively, while those of Western Carriers fell 7% from the issue price.  

* Of the Nifty 50 stocks, 25 rose and 25 fell

* Of the Sensex stocks, 15 rose and 15 fell

* On the NSE, 1,352 stocks rose, 1,439 fell, and 90 were unchanged

* On the BSE, 1,932 stocks rose, 2,045 fell, and 99 were unchanged

* Nifty Metal: up 3%; Nifty Energy: up 0.8%; Nifty PSU Bank: down 0.9%

BSE                                               NSE
Sensex: 84914.04, down 14.57 points               Nifty 50: 25940.40, up 1.35 points

End

US$1 = 83.67 rupees

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

Edited by Saji George Titus

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