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Informist, Wednesday, Oct. 9, 2024

By Alina Geogy

MUMBAI – Benchmark indices are expected to fall for a third consecutive session Thursday as investor sentiment remains dented by expectations of subdued corporate earnings for the September quarter and continued net selling by overseas investors, analysts said. Investors will focus on information technology major--Tata Consultancy Services--which will kick off the corporate earnings season Thursday.

Despite the Reserve Bank of India's Monetary Policy Committee changing its stance to 'neutral' from 'withdrawal of accomodation' and keeping interest rates unchanged, in line with market expectations, investors are yet to receive clarity on when the central bank would begin cutting rates. The indices erased all intraday gains and ended slightly lower Wednesday after a lack of hints from the RBI about the same. Wednesday, the Nifty 50 closed 0.1% lower at 24981.95 points, while the BSE Sensex closed 0.2% lower at 81467.10 points. The Nifty 50 is now expected to find support at 24900 points and face resistance at 25200-25225 points.

Investors are also likely to remain cautious as companies are expected to post subdued earnings growth for Jul-Sept, beginning with Tata Consultancy Services. TCS had already given cautious commentary and said earnings for Jul-Sept would be softer on a sequential basis, a research analyst at a domestic brokerage firm said.

Revenue growth for IT companies for Jul-Sept is likely to be decent, with mid-tier companies continuing to do well, especially those having strong offerings in data engineering and enterprise resource planning modernisation, Motilal Oswal Financial Services said in a note.

Prices of crude oil will remain in focus after reports of likely ceasefire negotiations between Hezbollah and Israel. US President Joe Biden is scheduled to meet Israeli Prime Minister Benjamin Netanyahu late Wednesday to discuss any strikes against Iran, according to a Reuters report. Market watchers are increasingly wary of a larger attack by Israel on Iranian oil facilities, which could lead to a surge in prices of the commodity if supply is disrupted. At 1927 IST, the December Brent Crude contract on the Intercontinental Exchange was $75.67 per barrel, down for the second day.

Market participants now await the minutes of the US Federal Open Market Committee's latest meeting, due late Wednesday. This could throw light on the possibility and timing of the Fed's next interest rate cut, and may have crucial commentary about the country's deteriorating labour market.

There is now an 88% probability that the Fed would cut rates by 25 basis points at its next meeting in November and a 12% chance that rates would be kept unchanged, according to the CME FedWatch tool. Currently, there is no expectation of a 50-bps rate cut by the Fed, compared to 35% a week ago.

Investors also await the weekly jobless claims data from the US and the country's consumer price index for September on Thursday. The consumer price index for September is expected to have risen 0.1% on month, according to a Dow Jones poll.

Market participants also digested the implications of the Haryana and Jammu and Kashmir assembly election results which were released Tuesday. Shares of several state-owned firms had risen Tuesday amid market buzz that sentiment was boosted after the Bharatiya Janata Party's record win in the Haryana Assembly elections. While some analysts ruled out state election results as a major factor behind stock gains, some said this could be positive for public sector stocks in the near-term.

The election results in Haryana provide much-needed political comfort for the BJP, and it should boost investor sentiment in the interim, brokerage firm Jefferies said, as per an ET Now report. Meanwhile, brokerage house Morgan Stanley said market returns are well held this time even though there is a chance that the BJP-led National Democratic Alliance may not fare well in the next state elections.  End

Edited by Akul Nishant Akhoury

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