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Informist, Friday, Oct. 11, 2024

By Alina Geogy

MUMBAI – After falling for two weeks, the benchmark indices are expected to consolidate over the coming days. Analysts expect action to be stock-specific next week as more companies announce their quarterly earnings, but the overall investor sentiment is seen weak due to expectations of muted financial growth in Jul-Sept.

Market participants will assess the US Producer Price Index for September, which could provide insights about the next interest rate decision by the US Federal Reserve. The PPI for last month was unchanged, after rising 0.2% in August. A poll by The Wall Street Journal expected an increase of 0.1%, according to Dow Jones.

Another key global trigger would be a news conference on Saturday by China's finance ministry, which is expected to announce fiscal stimulus to boost its economy. Investors were left disappointed by the lack of fresh stimulus measures at a crucial press conference earlier this week. Several metal stocks, such as Hindalco Industries, Tata Steel, and JSW Steel, rose Friday in anticipation of positive tiding from the conference, analysts said. The Nifty Metal index closed nearly 1% higher Friday, up for the third day in a row.

The meeting will be crucial to assess if the recent sharp gains in Chinese equities will continue. It will also have a bearing on Indian metal manufacturers, as China is a key market. "While we are not banking heavily on an uptick in Chinese demand in the near-term, any favourable fiscal policy would result in iron ore cost push to prices and lower exports," Emkay Global Market Research said in a report.

Analysts believe foreign investors have been selling shares in the domestic equity market in order to invest in China after the stimulus measures announced in September. "Hot money is moving out to China," the head of research at a domestic brokerage firm said. But, domestic investors should not be disheartened by the recent outflows by overseas investors, but rather remain invested as "FIIs are just waiting for a correction to pump in the money" back here, the head of research said.

Foreign institutional investors have been net sellers of domestic equities for 10 straight days. On Friday, FPIs net sold shares worth INR 41.63 billion, while domestic institutional investors net bought shares worth INR 37.31 billion, as per provisional data.

After Tata Consultancy Services' weaker-than-expected results this week, investors now await earnings of two Nifty 50-constituents, Reliance Industries and HCL Technologies, scheduled for release Monday. Reliance Industries is expected to report an on-year fall of nearly 10% in its consolidated net profit for Jul-Sept as weak refining margins may hurt the profitability of its oil-to-chemicals business, which is its largest segment. RIL is the largest company in the Nifty 50 index by market capitalisation.  HCL Technologies' consolidated net profit for Jul-Sept is expected to fall over 5% on quarter while revenue is expected to grow 2% on quarter.

Friday, the Nifty 50 closed 0.1% lower at 24964.25 points and the BSE Sensex closed 0.3% lower at 81381.36 points. The indices fell nearly 5% each in the last two weeks. The intermediate resistance zone for the Nifty 50 is 25250-25300 points, and a strong breakthrough at this level could potentially trigger the next phase of the rally from a positional perspective, Osho Krishan, senior analyst of technical and derivatives at Angel One, said in a note. At the lower end, the recent low of 24800-24700 points is expected to offer robust support and mitigate any potential setbacks, he said.  End

Edited by Ashish Shirke

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