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Informist, Friday, Oct. 11, 2024

By Alina Geogy

MUMBAI – Benchmark indices closed marginally lower Friday after remaining in a narrow range throughout the session. A fall in shares of Tata Consultancy Services after the company's weaker-than-expected Jul-Sept earnings, and a decline in banking stocks weighed on the indices. However, buying momentum in select heavyweight stocks limited the fall in indices.

Investors seemed discouraged by the likelihood of subdued corporate earnings for the September quarter, continued selling by foreign institutional investors in recent sessions and expensive valuations in most sectors, analysts said. They also tracked overnight losses in the US market, where key indices fell after the country's hotter-than-expected inflation report for September and an unexpected rise in weekly unemployment claims.

After remaining in a range of around 100 points throughout the session Friday, the Nifty 50 index closed at 24964.25 points, down 0.1%, or 34.20 points. Meanwhile, the Sensex settled at 81381.36 points, down 0.3%, or 230.05 points. In comparison with these benchmark indices, the broader market outperformed, as all Nifty mid- and small-cap indices closed the day with gains. On a weekly basis, the broader market indices etched gains, while the benchmark ones fell for the second straight week.

Shares of TCS were among the major contributors to the decline in the indices as these fell to a two-month low and closed nearly 2% down Friday. TCS had the seventh-highest weightage of nearly 4% in the Nifty 50 index as of Sept. 30. Post market hours Thursday, the company reported weaker-than-expected consolidated net profit for Jul-Sept, along with a decline in margin and total deal wins. While the company guided for an improvement in earnings in Oct-Mar, there are still hiccups in the demand environment, analysts said.

A major part of TCS' revenue is from North America, where sufficient signs of a recovery in demand are yet to be seen, Rishubh Vasa, research analyst at Indsec Securities & Finance, said. It is yet to be seen if the recent rate cuts by the US Federal Reserve could boost client spending and deals for the company, he said. Post earnings, global brokerage firms Citi and JP Morgan slashed their target prices for the stock. JP Morgan expects TCS' growth to broadly recover over Oct-Mar supported by the financial solution and technology verticals, as per news reports.

There were several stock-specific movements as investors reacted to other corporate earnings and commentaries by several brokerage firms. Shares of Tata Elxsi had risen nearly 3% in early trade after the information technology firm's net profit for Jul-Sept rose 25% on quarter, slightly higher than analysts' expectations. However, the stock could not sustain these gains.

Shares of Just Dial extended gains sharply after the company, during market hours, reported a sequential growth of over 9% in net profit for the September quarter. The company's bottom line for the quarter more than doubled on an annual basis.

Shares of microfinance firm CreditAccess Grameen fell over 4% after Nomura Global Markets Research downgraded the stock's rating and lowered its target price. The brokerage flagged several headwinds for the company, such as a decline in assets under management in Jul-Sept and deterioration of asset quality.

Shares of Cummins India fell nearly 6% intraday after global brokerage firm Goldman Sachs downgraded the rating on the stock to 'sell' and set a target price which implied a downside of over 23% from the close on Thursday. Goldman Sachs expects a decline in the overall demand for diesel generators in the medium to long term owing to the growing adoption of other alternatives, as per media reports. It also expects exports to take a hit because of stringent regulations on emissions and the weak macroeconomic environment.

Among sectors, banks and financial stocks closed in the red, while pharmaceuticals, metal and information technology companies gained. "The market has been facing selling pressure on every rise, though resilience in key heavyweights, particularly in the IT, pharma, and metal sectors, has slowed the downward momentum," Ajit Mishra, senior vice-president of research at Religare Broking, said in a note.

Shares of heavyweight private banks ICICI Bank, Axis Bank, and HDFC Bank were among the worst-hit in the Nifty 50. Losses in these stocks dragged the Nifty Bank index down nearly 1%, making it the worst hit among sectoral indices. Meanwhile, shares of Bandhan Bank bucked this trend and rose over 12% after the Reserve Bank of India approved the appointment of Partha Pratim Sengupta as the bank's managing director and chief executive officer.

Shares of metal companies such as Hindalco Industries gained, while others ended off highs. These stocks had buying momentum as investors expect China to announce more stimulus measures to boost its economy, which could boost demand for metal. China's finance ministry will detail plans for fiscal stimulus at a news conference Saturday, as per a Reuters report. The Nifty Metal closed nearly 1% higher, up for the third day in a row.

* Of the Nifty 50 stocks, 30 rose and 20 fell

* Of the Sensex stocks, 16 rose and 14 fell

* On the NSE, 1,480 stocks rose, 1,287 fell, and 83 were unchanged

* On the BSE, 2,143 stocks rose, 1,751 fell, and 117 were unchanged

* Nifty Bank: down 0.7%; Nifty Realty: down 0.7%; Nifty Pharma: up 1.2%

BSE                                               NSE

Sensex: 81381.36, down 230.05 points or 0.28%     Nifty 50: 24964.25, down 34.20 points or 0.14%

End

Edited by Deepshikha Bhardwaj

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