More Stories

Informist, Thursday, Sep 26, 2024

By Anjana Therese Antony

MUMBAI – The pace of gains in the equity market, backed by short covering ahead of the monthly expiry of derivatives contracts, is likely to slow on Friday, analysts said. Trends in global markets are likely to lend cues to investors in the absence of major domestic triggers, they said. The short-term approach is positive as there is enough liquidity and strong foreign inflows, which would be further supported by a likely robust corporate earnings season which starts in October. 

Stretched valuations will keep investors cautious about the possibility of a correction in the near term, especially as the domestic market continued to hit fresh record highs throughout the week. Today, the Nifty 50 and BSE Sensex closed 0.8% higher each at their all-time closing highs of 26216.05 points and 85836.12 points, respectively. The support for the 50-stock index is pegged at 26100-26000 points for the near term and resistance at 26300-26350 points, technical and derivatives analysts at three broking firms said.

The semi-annual rejig of the Nifty indices, scheduled for Friday, is expected to come up with several inclusions, exclusions, and significant weight changes, Nuvama Institutional Equities said in a report today. Among the Nifty 50 constituents, Nuvama expects an increase in weight for Cipla and HDFC Life Insurance Co and a reduction in weight for companies including Mahindra & Mahindra, Infosys, ICICI Bank, Reliance Industries, and Adani Enterprises. 

Among the sectors, some analysts said valuations of the banking sector stocks are comfortable compared to other sectors. "We see a short-term rally in financials led by a potential deposit growth recovery as the RBI (Reserve Bank of India) begins its easing cycle, Emkay Global Financial Services said in its strategy report. "We, however, believe this rally will not last beyond a quarter as margins come under pressure when repo rates are cut," it said. The broking firm's top picks for this short-term rally are HDFC Bank, Shriram Finance, RBL Bank, and IndusInd Bank. 

Shares of companies heavily dependent on rural consumption, such as fast-moving consumer goods and automobile companies, are expected to rise more in the short term, backed by recovery in rural demand and a strong festive season in the coming months, analysts said. Today, automobile stocks surged on expectations of better monthly sales data, scheduled for release next week.

Tyre manufacturers are in for a rough patch as the price of natural rubber has surged over 33% on year in the first five months of the current financial year, according to CRISIL Market Intelligence and Analytics. Strong demand and crunched supply pushed prices higher, which could strain profitability, it said. The domestic price of natural rubber was 238 rupees per kg on average in August, way above the trend in the past decade, CRISIL Market Intelligence said in its report.  

Among the initial public offerings currently open, the subscription for KRN Heat Exchanger and Refrigeration will close on Friday. The issue was subscribed 24.09 times on the first day, with the company receiving bids for 264.86 mln shares against 10.99 mln shares on offer.  End

Edited by Saji George Titus

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.