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Informist, Monday, Sept. 30, 2024

By Anjana Therese Antony

MUMBAI – Investors may continue to sell shares and take out profits Tuesday in an overbought market that hit record highs the previous week, analysts said. "Market rallied a lot on the (US) rate cut outcome ... now a good 2-3% more correction can happen in the short term, following which earnings, foreign inflows, and the festive season will again drive the growth," a research analyst at a domestic broking firm said.

The Nifty 50 closed 1.4% lower at 25810.85 points and the BSE Sensex ended 1.5% lower at 84299.78 points. The short-term support for the 50-stock index is pegged at 25700-25600 points and resistance at 26000 points, according to technical and derivatives analysts at three domestic broking firms. Last week, both the benchmark indices hit record highs every day, triggering near-term worries about a correction.

Analysts also said valuations have been expensive and will continue to keep gains in check in the near term. In the absence of major domestic triggers, they expect investors to continue tracking developments in global markets for cues.

The September automobile sales data, scheduled for release Tuesday, will also be in focus. Analysts believe that two-wheeler manufacturing companies may continue to report strong growth, but anticipate muted demand for passenger and commercial vehicles. "We expect good volumes, with 2Ws (two-wheelers) out-running others. Also, we expect tractor volumes to grow in double digit in H2 (Oct-Mar) FY25," Anand Rathi Share and Stock Brokers said in its report.

When it comes to fast-moving consumer goods stocks, analysts are optimistic that a robust festival season and recovery in rural demand will drive the upside. Shares of Britannia Industries were among the few gainers in the Nifty 50 Monday, up 1.1%. The Nifty FMCG closed 0.5% lower and was among the least-affected sectoral indices.

Metal stocks may rise more Tuesday, and may also see some profit sales at higher levels, an analyst tracking the sector said. These stocks have been rising on new measures adopted in China to boost the world's second-largest economy, which is expected to drive a global recovery in demand. The People's Bank of China Sunday asked commercial banks in the country to lower mortgage rates for existing home loans before Oct. 31, reports said. The banks are estimated to reduce the existing mortgage rates by about 50 basis points.

The Nifty Metal closed 1.3% higher as the top sectoral gainer, with most of its constituents in the green. Shares of JSW Steel, Hindalco Industries, and Tata Steel were among the top gainers in the Nifty 50.

Among specific stocks, Tata Consultancy Services may rise as the company's board prepares to consider a second interim dividend on Oct 10. Kalpataru Projects International may rise Tuesday as the company got an order worth INR 12.41 bln for the transmission and distribution business. These new orders have strengthened the company's order book with year-to-date order inflows exceeding INR 110 bln, Manish Mohnot, managing director and chief executive officer, said in an exchange filing Monday after market hours. The stock closed nearly 3% lower at 1,367.25 rupees on the National Stock Exchange.  End

Edited by Rajeev Pai

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