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Informist, Monday, Oct. 14, 2024

By Alina Geogy

MUMBAI – Benchmark indices closed higher aided by gains in select banking and information technology stocks. Investor sentiment was boosted by positive cues from the US market, a fall in crude oil prices, and hopes that commentary by major domestic companies would provide some relief amid expectations of subdued earnings in the September quarter.

Indices opened higher as investors tracked positive cues from the US market, where strong corporate earnings by major financial institutions took key US indices, the S&P 500 and Dow Jones Industrial Average, to record highs. Most Asian indices were also higher, with Chinese indices leading the gains. China's finance ministry, at a highly-anticipated briefing Saturday said more debt would be issued to boost the economy. It also said a specific stimulus expenditure figure was likely to be announced by the end of this month, but stopped short of divulging details.

On Monday, the Nifty 50 and Sensex closed at 25127.95 points and 81973.05 points, respectively, up 0.7% each. With these gains, both indices are around 4% lower from the record highs hit on Sept. 27. The broader market largely mirrored the gains in the benchmark indices. Among sectors, banking, information technology, and real estate stocks were the major gainers, while select oil and gas, media, and metal stocks fell. 

Shares of private banks recovered losses from the previous session. Index heavyweight HDFC Bank, which rose 2.3%, contributed most to the gains in the index. Shares of Kotak Mahindra Bank and ICICI Bank also ended higher. The Nifty Bank ended 1.3% higher on the back of gains in 11 out of 12 of its constituents.

Most information technology stocks extended gains for the second consecutive session. Barring shares of Tata Consultancy Services, shares of all other firms in the Nifty IT index ended with gains. Shares of Wipro ended 4% higher and led the gains in the index.

Sentiment towards shares of Wipro was boosted after the company said its board would meet on Wednesday and Thursday and consider a bonus issuance of shares. There is also an expectation that the company may raise its guidance for the December quarter, some analysts said. Further, the stock is also at a comfortable valuation at the current levels, analysts said.

On the other hand, shares of TCS bucked the trend and ended 0.3% lower, down for the fifth consecutive session. Post market hours Thursday, TCS reported weaker-than-expected earnings for Jul-Sept, with a sequential decline in consolidated net profit, total deal wins and margin.

Gains in the US market and healthy economic data from India are keeping investor sentiment positive, Prathamesh Masdekar, research analyst at BP Equities, said. Even though there are expectations that several companies would report subdued earnings for Jul-Sept, hopes are now pinned on the commentaries by these firms that may indicate improvement in margins in the upcoming quarters, he said. Analysts also said companies' sales could get a boost from the festive season for the next quarter.

Investors reacted to the corporate earnings of companies announced during market hours. Shares of Alok Industries erased all gains and fell over 2% after the company said its net loss widened on year in the September quarter. On the other hand, shares of Sterling and Wilson Renewable Energy turned positive and rose nearly 4% after the company reported a consolidated net profit for Jul-Sept compared to a net loss a year ago. However, the stock could not sustain the gains and ended 2% lower.

Shares of Avenue Supermarts fell nearly 9% after some brokerages downgraded the stock's rating and slashed their earnings estimates for the next quarter, saying the Jul-Sept impact of quick commerce platforms, especially in large metro cities, was higher than anticipated. The company, which operates the DMart retail chain in India, Saturday reported better-than-expected consolidated revenue for the September quarter, but its consolidated net profit missed analysts' estimates.

Among upcoming earnings, shares of Reliance Industries ended largely unchanged ahead of its September quarter earnings due later in the day, where it is expected to report a near 10% on-year fall in consolidated net profit as weak refining margins may hit profitability.

Meanwhile, shares of HCL Technologies, which detailed Jul-Sept earnings post-market hours Monday, ended up nearly 1%. The company reported a consolidated net profit of INR 42.35 billion in Jul-Sept, higher than the consensus estimate of INR 40.29 billion.

Shares of Larsen & Toubro rose over 2% after global brokerage firm JP Morgan initiated coverage on the stock with an 'overweight' rating, citing positive aspects such as a strong balance sheet and cash flow, and a large order book. L&T offers an attractive combination of growth at a very reasonable valuation, the brokerage firm said, as per media reports. JP Morgan set a target price of INR 4,630 for the stock, implying an upside of 33% from the previous close.

A positive outlook by another foreign brokerage firm, HSBC, boosted sentiment towards shares of oil marketing companies. Shares of Hindustan Petroleum Corp, Bharat Petroleum Corp, and Indian Oil Corp, rose 1-3% after HSBC maintained a 'buy' rating on these stocks, saying the current volatility in oil prices due to escalating geopolitical tensions was positive for these companies, according to media reports.

Among other stocks, shares of drugmaker Wockhardt hit a 5% upper circuit after the company Friday said a committee of the national drug regulator Central Drugs Standard Control Organisation accorded a favourable recommendation for its novel antibiotic, Miqnaf, developed for treating community-acquired bacterial pneumonia in adults. A positive opinion from the committee would pave the way for getting the final approval for the antibiotic from the Drugs Controller General of India, the company said.

* Of the Nifty 50 stocks, 35 rose and 15 fell

* Of the Sensex stocks, 21 rose and 9 fell

* On the NSE, 1,432 stocks rose, 1,380 fell, and 86 were unchanged

* On the BSE, 2,069 stocks rose, 1,972 fell, and 154 were unchanged

* Nifty Realty: up 1.6%; Nifty IT: up 1.3%; Nifty Media: down 1%

BSE                                               NSE

Sensex: 81973.05, up 591.69 points or 0.73%       Nifty 50: 25127.95, up 163.70 points or 0.66%

End

Edited by Saji George Titus

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