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Informist, Thursday, Oct. 3, 2024

By Alina Geogy

MUMBAI – Heightened worries about a wider conflict in West Asia took the Indian equity markets down Thursday. Investors took out profits in an overbought market, pushing the benchmark indices to three-week lows. All sectors bore the brunt of the profit sales, with automobiles, real estate, oil and gas, and infrastructure being the worst hit. Only two of the Nifty 50 stocks and one in the BSE Sensex ended higher.

The intensifying conflict between Israel and Iran, which also pushed international crude oil prices higher, is the key reason for the weakness in the market, Vanitha Poojari, equity research analyst at Maximus Securities, said. Many analysts said a correction in the market was overdue, particularly after the recent gains, which saw the benchmark indices venturing into uncharted territories at a pace not seen before.

Nearly 77% of stocks traded on the NSE ended with losses, while only 20% ended with gains. With this, the market breadth, which was positive in the last few sessions despite a correction, turned negative. Concern among domestic investors was evident with the sharp upward movement of the India VIX. The market's volatility gauge rose over 9% to end at 13.17, its highest level in over a week.

Tensions in West Asia escalated after Iran's missile attack on targets across Israel Tuesday in retaliation for the killing of leaders of militant groups Hezbollah and Hamas. Early Thursday, the Israeli military said it conducted a strike in Beirut, Lebanon's capital. Israel's threat of retaliation against Iran, particularly if it targets the country's oil infrastructure, could push global oil prices higher, brokerage Mehta Equities said in a note.

The Nifty 50 ended at 25250.10 points and the Sensex at 82497.10 points, down 2.1% each. Losses in index heavyweight stocks such as Reliance Industries, HDFC Bank, and Larsen & Toubro contributed the most to the decline in the benchmark indices.

Fears of an escalation of the conflict in West Asia took the price of Brent crude to $75, up almost 2%. The rise in crude oil price affected several stocks negatively. Shares of oil marketing companies such as Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp. fell 4-7%, while shares of Asian Paints fell nearly 4% as petroleum products are a crucial raw material in paints. Meanwhile, shares of upstream oil firm Oil and Natural Gas Corp ended marginally higher. Growing geopolitical tensions in West Asia are likely to disrupt supply from major suppliers and push crude oil prices on the New York Mercantile Exchange higher owing to supply concerns, ICICI Direct Research said.

Shares of Larsen & Toubro fell to an over two-month low and ended over 4% lower. Around 30% of the company's projects are in West Asia, a research analyst at a domestic broking firm said. As the conflict in the region intensifies, these projects could be halted, affecting the company's business, the analyst said.

Positive commentary by brokerages boosted sentiment towards shares of JSW Steel, which ended 1.2% higher. Shares of JSW Steel hit a lifetime high after Morgan Stanley upgraded the stock's rating to 'overweight' from 'equalweight' and Nomura Global Markets Research initiated coverage on the stock with a 'buy' rating. The brokerages expect Indian metal companies to do well after the stimulus announced by China to boost its economy.

In the Nifty 200 index, shares of Petronet LNG and BSE were among the top gainers while those of Dabur India were the worst hit. Shares of Petronet LNG rose nearly 6% after Emkay Global Financial Services upgraded the stock's rating to 'buy' from 'add' and raised the target price by 16%. The brokerage reiterated its positive view on the stock, citing a steady outlook and attractive valuation. On Tuesday, the company said it commissioned two liquefied natural gas storage tanks at its Dahej LNG terminal in Gujarat.

Shares of BSE rose nearly 3% and hit a lifetime high as the exchange is expected to benefit from increased revenue from options transactions following the Securities and Exchange Board of India's latest announcements aimed at tightening the equity index derivative framework.

Shares of Dabur India ended over 6% lower after several brokerages gave bearish commentary on the company for the near term after it posted a disappointing quarterly update Tuesday. Dabur expects its consolidated revenue for Jul-Sept to fall by a percentage value in the mid-single digit and profitability to be hit by lower primary sales.

Among other stocks, shares of Jubilant Ingrevia rose nearly 6% after the company's wholly-owned subsidiary, Jubilant Agro Sciences, signed a pact with an international agrochemical firm to manufacture an agro-intermediate. Shares of KRN Heat Exchanger and Refrigeration debuted on the NSE at a premium of 118.2% to the issue price. The stock ended slightly lower than its listing price.

Among sectoral indices, Nifty Realty and Nifty Auto, down 4.4% and 2.9%, respectively, were the worst hit. Nifty Realty fell for the fourth straight session. The Nifty Pharma and Nifty Metal indices, down 0.5-0.6%, fell the least among sectoral indices. Nifty Metal snapped an eight-day winning streak.

* Of the Nifty 50 stocks, 2 rose and 48 fell

* Of the Sensex stocks, 1 rose and 29 fell

* On the NSE, 576 stocks rose, 2,160 fell, and 75 were unchanged

* On the BSE, 1,107 stocks rose, 2,881 fell, and 88 were unchanged

* Nifty Realty: down 4.4%; Nifty Auto: down 2.9%; Nifty Pharma: down 0.5%

BSE                                               NSE

Sensex: 82497.10, down 1769.19 points or 2.10%    Nifty 50: 25250.10, down 546.80 points or 2.12%

End

Edited by Rajeev Pai

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