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Informist, Thursday, Oct. 10, 2024

By Alina Geogy

MUMBAI – Benchmark indices ended slightly higher Thursday on the back of strong gains in most banking and financial stocks. However, further gains were capped by losses in information technology and pharmaceutical stocks. Analysts said the gains indicate that the market is recovering after the aggressive sell-off in recent sessions. Support from domestic institutional investors and falling prices of crude oil also buoyed investor sentiment.

The Nifty 50 closed at 24998.45 points, up 0.1%, amid the expiry of the weekly derivative contracts of the 50-stock index, while the BSE Sensex closed at 81611.41 points, up 0.2%. Earlier in the day, gains in shares of energy companies and some automakers helped the indices rise over 0.6% from the previous close. However, the indices came off highs as the gains did not sustain.

"It was clearly a day of consolidation. The positive key takeaway for the Nifty 50 is that it is holding around the psychological support level of 25000 points," Tejas Shah, technical research analyst at JM Financial, said in a note. "At the current juncture, the bears are in full control of the markets and are using every pullback rally to create short positions", he said.

Major banking stocks recovered some of the lost ground on Thursday after sharp losses last week, analysts said. Shares of HDFC Bank, Kotak Mahindra Bank, and Axis Bank were among the top contributors to the gains in Nifty 50. On the other hand, shares of drugmakers Cipla and Sun Pharmaceutical Industries fell 3.7% and 2.2% respectively, to become among the worst hit on Nifty 50. With this, both stocks have erased most gains made in the last few sessions.

Amid a lack of major domestic triggers in the run-up to the earnings season, investors took cues from global markets. Major indices in the US had ended higher Wednesday after the minutes of the US Federal Open Market Committee's last meeting showed the majority of the officials supporting a 50-basis-point rate cut. Most Asian indices then mirrored gains in their US peers, with Hong Kong's Hang Seng being the top gainer in the region.

Prices of crude oil continued to ease after weekly data showed a higher-than-expected rise in inventories in the US. At 1605 IST, the December futures contract of Brent crude oil traded at $77.70 per barrel on the Intercontinental Exchange, down from the one-month high of $81.16 per barrel on Monday.

The market was "oversold quite a bit", which is resulting in a bounce-back, a research analyst at a domestic brokerage firm said. Though foreign investors have been net sellers of late, the market is holding up due to support from domestic institutional investors, the analyst said. There have been occasions recently when domestic institutions bought much more than the net sales by overseas investors, which are positive signs for investors, the analyst said.

Banking, metal, and energy sectors outperformed the benchmark indices, while the pharmaceuticals and information technology sectors fell. The Nifty Pharma index fell 2%, with 16 out of the 20 constituents ending in the red. The Nifty IT index snapped a four-day winning streak and ended over 1% down. Among broader market indices, the Nifty small-cap indices mirrored the gains in the benchmark indices, while the Nifty mid-cap indices underperformed.

Several defence stocks gained amid news reports that the government's Cabinet Committee on Security cleared major deals, including two indigenous nuclear submarines. Shares of shipbuilding companies Mazagon Dock Shipbuilders and Garden Reach Shipbuilders & Engineers gained 8.4% and 6.5%, respectively. The orderbook of these companies have gone up substantially, which is expected to boost revenue visibility for the next two to three years, a research analyst at a domestic brokerage firm said.

Shares of fertiliser manufacturers such as Fertilizers & Chemicals Travancore and Rashtriya Chemicals & Fertilizers rose 5-7%. Shares of Rashtriya Chem rose after the company's board Wednesday approved a INR 10-billion from Larsen & Toubro to set up a complex fertiliser plant with a capacity of 1,200 tonnes per day at Thal in Maharashtra.

Shares of Tata Investment Corp ended 6% higher after rising as much as 15% during the session amid a surge in trade volume. The stock likely rose due to a technical bounce-back after the recent correction, a research analyst at a domestic brokerage firm said. Several other Tata Group stocks, such as Tata Chemicals and Tata Teleservices (Maharashtra), also rose sharply.

Shares of PNC Infratech rose over 6% after the company was declared the lowest bidder by the City and Industrial Development Corp. of Maharashtra for a construction project worth INR 20.91 billion. Shares of G R Infraprojects rose nearly 6% during the day after the company received a letter of acceptance from the Maharashtra Metro Rail Corp. for the Nagpur Metro rail project. However, the stock ended just 1% higher.

Shares of Nifty 50-constituent Tata Consultancy Services ended 0.6% lower ahead of its September quarter earnings after failing to hold onto early gains. Post market hours, the information technology firm reported a consolidated net profit of INR 119.09 billion for Jul-Sept, lower than analysts' estimate of INR 125.14 billion.

* Of the Nifty 50 stocks, 23 rose, 26 fell and 1 was unchanged

* Of the Sensex stocks, 15 rose and 15 fell

* On the NSE, 1,560 stocks rose, 1,220 fell, and 89 were unchanged

* On the BSE, 2,199 stocks rose, 1,730 fell, and 117 were unchanged

* Nifty Private Bank: up 1.6%; Nifty Bank: up 1%; Nifty Pharma: down 2%

BSE                                               NSE

Sensex: 81611.41, up 144.31 points or 0.18%       Nifty 50: 24998.45, up 16.50 points or 0.07%

End

Edited by Saji George Titus

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