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Informist, Tuesday, Oct. 1, 2024

By Alina Geogy

MUMBAI – After record-breaking sessions last week, the benchmark indices are expected to undergo some more corrections on Thursday. The profit-booking spree, which began Friday, is likely to continue post the market holiday Wednesday on account of Gandhi Jayanti, analysts said.

The weak sentiment in the market is likely to continue as long as the Nifty 50 index remains below 25910 points, Shrikant Chouhan, head of equity research at Kotak Securities, said in a note. If the Nifty 50 remains below this level, it can retest 25680-25650 points, he said. On the other hand, the index could bounce back to 25975-26000 points if it rises above this level, he said. On Tuesday, the Nifty 50 ended at 25796.90 points, down 13.95 points, while the Sensex ended at 84266.29 points, down 33.49 points.

The benchmark indices had risen sharply over the last few weeks, resulting in record gains for the market. However, this has led to worries about expensive stock valuations and a deeper correction in the market. "The blind faith in new narratives is ample proof of irrational exuberance trumping rational behaviour at times," Kotak Institutional Equities said in a report, talking about the relevance of valuations.

Escalating geopolitical tensions are also likely to affect investor sentiments. Israeli forces conducted strikes in Lebanon on Tuesday aimed at uprooting Hezbollah positions within a few miles of the shared border, as per news reports. The Israeli operations could continue for days or weeks depending on diplomatic developments and their success in moving Hezbollah back and stopping the attacks on northern Israel that have persisted for the past year as the two sides exchanged fire, according to a Dow Jones Newswires report.

Investors will assess the Securities and Exchange Board of India's latest circular released Tuesday aimed at tightening the equity index derivative framework. SEBI will raise the minimum contract size of index derivatives to INR 1.5 million, which will take effect from Nov. 20. The market regulator also mandated that the weekly expiry of contracts will be on only one benchmark index per exchange from Nov. 20.

Among specific stocks, shares of Maruti Suzuki India may gain after the automaker's total sales in September rose nearly 2% on year, supported by growth in total exports. Two-wheeler manufacturer Hero MotoCorp also posted growth in total sales for September, aided by strong growth in motorcycle despatches.

The automobile wholesale numbers for September exhibited a positive trend, with the commercial vehicle segment being the only exception, experiencing marginal decline, Sagar Shetty, research analyst at StoxBox, said in a note. The passenger vehicle segment recorded positive growth, largely driven by increased demand due to the festive season and inventory build-up ahead of Diwali and Navratri, he said. The industry now anticipates a positive uptick, with dealers continuing to build up inventory and expecting robust retail demand driven by the major festivities in October, he said.

Shares of fast-moving consumer goods major Dabur India may see some action on Thursday after the company said it expects to post a mid-single-digit decline in its consolidated revenue for Jul-Sept. The company decided to correct distributor inventory in the general trade channel, which would lead to a temporary decline in the topline, it said.  End

Edited by Saji George Titus

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