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Informist, Thursday, Sep 26, 2024

By Noel John

MUMBAI – Extending gains for the sixth straight session, the Nifty 50 index closed at a record high today. Short-covering in the final trading hour on the day of the monthly expiry of derivatives contracts pushed the market higher. The domestic benchmark indices also hit fresh record highs today, led by gains in shares of automobile, metal, and financial services companies. 

Today, both the Nifty 50 and the Sensex ended at record closing highs. The Nifty 50 and Sensex closed 0.8% higher each at 26216.05 points and 85836.12 points, respectively. The market is witnessing sector rotation, with a few sectors taking the lead on one day and some other sectors another day, said Sunny Agrawal, head of fundamental equity research at SBI Securities. The recent rally is on the back of sharp gains in large-cap stocks, while the mid- and small-cap stocks are seeing signs of profit booking, Agrawal said. 

Meanwhile, the broader market indices were mixed. The Nifty Midcap indices ended with marginal gains, while Nifty Smallcap indices were around 0.5% down. 

Going forward, large-cap stocks are expected to sustain their gains. However, profit bookings seen in mid-cap and small-cap stocks will likely continue, said Narendra Solanki, head of fundamental research – investment services at Anand Rathi Share & Stock Brokers. This is because large-cap stocks are relatively cheaper compared to mid- and small-cap stocks, Solanki added. 

Indices are notching fresh record highs driven by liquidity, which is pouring in mainly through the mutual fund route, Joseph Thomas, head of research at Emkay Wealth Management, said. According to Thomas, one should not lose focus on the fact that the economic fundamentals of India are strong, which is defined to a significant extent by GDP growth of 7%. 

Apart from a robust economic growth outlook, the recent cut in interest rates by the US Federal Reserve, a good monsoon, significant year-on-year rise in crop sowing during this crop year, and robust food grain output from last crop year have renewed a lot of hope on Indian markets, Chokkalingam G., founder of Equinomics Research, said. A huge stimulus package from China has also given hope that global deflationary conditions could be avoided, he said. "Further steep fall in oil prices yesterday (Wednesday) also improved outlook for Indian economy and markets," he added.

Shares of automobile companies were the major gainers today, with those of Maruti Suzuki India ending nearly 5% higher. Japan's Suzuki Motor is planning a 70% increase in its dealership network in India through Maruti Suzuki to 6,800 by 2029-30 (Apr-Mar), Nikkei Asia reported Wednesday. Maruti Suzuki has a dealer network of about 3,900 outlets as of June quarter, as per reports. 

The sentiment around automobile stocks has improved ahead of the monthly sales data for September next week, which is expected to be good, said Jathin Kaithavalappil, assistant vice-president of research at Choice Equity Broking. Kaithavalappil expects the numbers to grow in the coming months due to the festival season. Owing to the rise in automobile stocks, the Nifty Auto index ended 2.3% higher, after hitting its record high during the day. 

On the downside, shares of Hero MotoCorp ended 0.6% lower, becoming one of the few stocks that ended in the red on the Nifty 50. The stock fell after brokerage UBS said Hero MotoCorp has lost substantial market share despite new product launches, and that festive strength has not helped in its full-year performance, according to an ET Now report. UBS has maintained a 'sell' rating on the stock with a target price of 3,350 rupees. This target price implies a nearly 45% downside from today's closing level of 6,051 rupees. 

Further, shares of metal companies extended gains after China on Tuesday announced a slew of measures to boost its economy. These measures include reducing the reserve requirement for banks by 50 basis points, and the seven-day reverse repo rate by 20 bps to 1.5%, lowering the rate on existing mortgage loans, and cutting the minimum down payment ratio for second homes to 15%, reports said. 

Among specific stocks, Oil and Natural Gas Corp ended 1.2% lower amid weakness in crude oil prices internationally. Crude oil prices fell in the global markets due to easing supply disruptions in Libya and as traders re-evaluate the effectiveness of China's stimulus plans to significantly boost the economy of the world's largest oil importer, Prathamesh Mallya, vice president of research of non-agri commodities and currencies at Angel One, said in a note today. 

* Of the Nifty 50 stocks, 44 rose and 6 fell

* Of the Sensex stocks, 28 rose and 2 fell

* On the NSE, 1,207 stocks rose, 1,589 fell, and 66 were unchanged

* On the BSE, 1,686 stocks rose, 2,293 fell, and 103 were unchanged

* Nifty Auto: up 2.3%; Nifty Metal: up 2.1%; Nifty Consumer Durables: down 0.9%

BSE                                               NSE
Sensex: 85836.12, up 666.25 points or 0.8%        Nifty 50: 26216.05, up 211.90 points or 0.8%

End

Edited by Tanima Banerjee

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