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Informist, Monday, Oct. 14, 2024

By Alina Geogy

MUMBAI – Indian equities are likely to rise more Tuesday as investors track largely positive cues from global markets, a fall in prices of crude oil, and hope for favourable commentary by companies post Jul-Sept earnings. However, continuous selling by overseas investors, expensive valuations, and ongoing geopolitical conflicts may keep gains in check. Investors will also react to the quarterly earnings of HCL Technologies and Reliance Industries declared after market hours where both announced higher-than-expected bottom lines for the September quarter.

Monday, the Nifty 50 index and BSE Sensex closed 0.7% higher each at 25127.95 points and 81973.05 points, respectively. The 50-stock index is expected to find support at 24920 points, while it may face resistance at 25234–25360 points.

HCL Technologies raised the lower end of its sales growth guidance for 2024-25 (Apr-Mar) and now sees constant currency sales growing at 3.5-5.0% in the year. Its consolidated net profit for Jul-Sept was unchanged from a quarter ago, but slightly higher than analysts' estimates. Next, investors will watch out for the quarterly earnings of banks and financial service providers HDFC Life Insurance Co., Bank of Maharashtra, and HDFC Asset Management Co.

The September quarter is usually softer vis-a-vis other quarters for Indian companies owing to several factors such as the monsoon, said Tushar Chaudhari, lead research analyst at Prabhudas Lilladher. Now, better consumer activity in the festive season may boost sales, helping companies report improvement in corporate earnings in the upcoming quarters, he said. Corporate earnings are likely to remain the main trigger for the market, but with expectations of subdued earnings growth for Jul-Sept, market participants are increasingly hoping for some positive commentary by companies.

Investors are also wary of the recent offloading of shares for at least 10 consecutive sessions by foreign institutional investors in the Indian equity market. Foreign portfolio investors have been net sellers of shares worth over INR 560 billion so far this month. These outflows come after China recently announced several stimulus measures to boost its economy.

The recent stimulus package by China, the keenness of its government to prop up the economy, and cheaper stock valuations are making it an attractive option, Chaudhari said. From the perspective of a global fund manager, Indian stocks are not cheap, he said. However, growth prospects are better here, especially with the growth rate in the Indian economy stronger than that of China, he said.

While the Chinese finance ministry's conference on Saturday outlining new stimulus measures was largely as expected, market participants are not assured that the recent stimulus measures can solve the property crisis or boost the muted consumer sentiment. The ministry provided guidance on its "ample room" for raising the budget deficit in the coming years, Morgan Stanley Research said. However, fiscal support on consumption and social welfare remains underwhelming with limited forward clarity, it said.

Positive surprises included stronger-than-expected efforts in resolving local government hidden debt and forward guidance on fiscal expansion in 2025, but other challenges went unaddressed, analysts at CreditSights said, according to a Dow Jones report. Focus tilted toward risk prevention, and the package fell short of bold policies to boost consumption and support the property and private sectors, they said. 

Further, the automobile sector will be watched closely after Shailesh Chandra, president of the Society of Indian Automobile Manufacturers, said sales of passenger vehicles are likely to grow just 3-5% in FY25 due to the high base of last year. The demand for passenger vehicles is holding up even at the high comparable period of last year, and that has provided respite for the industry, Chandra said.

Hyundai Motor India's INR 278.70-bln initial public offering, the largest in the country, is set to open Tuesday and close Thursday. From a valuation perspective, the issue is fairly valued and not aggressively priced, brokerage firm SAMCO Securities said in a note.  End

Edited by Deepshikha Bhardwaj

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