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Informist, Tuesday, Oct. 15, 2024

By Alina Geogy

MUMBAI – Benchmark indices gave up early gains and ended lower Tuesday owing to losses in select heavyweight financial and oil stocks. Anticipation that companies will largely report subdued earnings for the September quarter, coupled with the recent continued selling by overseas investors and expensive stock valuations, dampened investor sentiment, analysts said. Companies that recently announced earnings for Jul-Sept were in the limelight, particularly Reliance Industries, which posted an on-year decline in consolidated net profit for the third straight quarter. 

The market looks cautious amid a lack of major triggers, other than corporate earnings, Rajesh Palviya, head of technical and derivatives research at Axis Securities, said. Expectations of the earnings for Jul-Sept are "not great", which is weighing on sentiment, he said. The Street has not given a "thumbs-up" to the Jul-Sept earnings reported by major companies so far, he said.

Shares of Reliance Industries, the largest Nifty 50 constituent, fell over 2% Tuesday to a low of over eight months. The company's consolidated net profit for Jul-Sept fell 5% on year, owing to weak earnings in the oil-to-chemicals and retail businesses. This stock contributed the most to the fall in the benchmark indices Tuesday. The Nifty 50 ended 0.3% lower at 25057.35 points and the BSE Sensex closed 0.2% lower at 81820.12 points.

Shares of HDFC Life Insurance fell nearly 4% after the company's value of new business margin for Apr-Sept missed the company's guidance and was also lower than in the year-ago period. Owing to this, the stock snapped a five-day winning streak even though all other metrics the company reported were positive.

HCL Technologies reported better-than-expected earnings growth for Jul-Sept and raised the lower end of its revenue growth guidance for financial year 2024-25 (Apr-Mar). After the earnings, several brokerages retained their positive view on the stock, some raised the target price, and one raised its rating to 'buy' from 'accumulate'. HCL Tech's favourable portfolio mix and robust net new deal wins may help the company reach the upper end of its "organic guidance" for FY25, Nirmal Bang Institutional Equities said.

Despite this, the stock ended hardly 1% up after rising 1.5% during the day. The gains were capped despite the upbeat brokerage commentary as demand for HCL Tech's businesses remains "cautious", Rishubh Vasa, research analyst at Indsec Securities and Finance, said. The company's margins will be affected in the coming quarters as it will hike wages in the December quarter and there will also be an impact of furloughs in Oct-Dec, he said.

Investors are also factoring in the uncertain outlook for companies with significant operations in the US ahead of elections in the country, Palviya of Axis Securities said. Mid-cap IT companies with an India-centric business may continue to gain, while the outlook is bearish for large-cap firms having major exposure to the US market. For the next couple of weeks, IT stocks may move in a range of 5% on both sides from the current market prices, he said.

Investors also reacted to the quarterly earnings of brokerage company Angel One, which saw a sharp surge in its stock price. Shares of Angel One rose over 18% after the company's net profit for Jul-Sept rose over 43% on year, surpassing analysts' estimates. The brokerage's total revenue from operations for the quarter rose nearly 44% on year. The stock hit a seven-month high and was the top gainer in the Nifty 500 index.

Shares of Network18 Media & Investments and TV18 Broadcast rose over 10% and nearly 7%, respectively, after parent company Reliance Industries Monday said the merger of the two companies with the India business of Walt Disney would be completed in the December quarter. The combined entity will have the largest market share of 30-35% in the Indian media space, a research analyst at a domestic brokerage said. The merged entity would be worth over INR 700 bln, according to news reports. It would also be number one in sports broadcasting and have a significant presence in the over-the-top platform business, the analyst said.

A fall in global prices of crude oil for the third day in a row boosted buying momentum in shares of oil marketing companies for at least the second consecutive session. Shares of Bharat Petroleum Corp. ended 2.4% higher, while those of Hindustan Petroleum Corp. closed 4.2% up. On the Intercontinental Exchange, the December futures contract of Brent Crude fell over 4% to $74.11 per barrel at 1657 IST. This is nearly 10% lower than the one-month high of $81.16 hit on Oct. 7.

Shares of Garuda Construction and Engineering, the latest company to be listed on the NSE, ended nearly 12% higher. The stock listed at INR 105, a premium of 10.5% to the issue price of INR 95. It rose to as much as INR 120.99 in early trade before investors began to take out profits. Over 46 million shares of the company were traded on the exchange Tuesday.

Among sectors, metal, automobile, and energy stocks ended with losses while real estate and media stocks gained. The Nifty Metal index fell over 1%, extending losses for the second day. It was the worst-hit sectoral index. Nifty Realty was the best performer, closing over 2% higher.

The broader market indices outperformed the benchmark ones, with the Nifty small-cap indices rising around 1% each. On the NSE, nearly equal numbers of stocks ended with gains and losses.

* Of the Nifty 50 stocks, 19 rose and 31 fell

* Of the Sensex stocks, 10 rose and 20 fell

* On the NSE, 1,382 stocks rose, 1,389 fell, and 102 were unchanged

* On the BSE, 2,068 stocks rose, 1,894 fell, and 102 were unchanged

* Nifty Metal: down 1.4%; Nifty Auto: down 0.8%; Nifty Realty: up 2.1%

BSE                                               NSE

Sensex: 81820.12, down 152.93 points or 0.19%     Nifty 50: 25057.35, down 70.60 points or 0.28%

End

Edited by Rajeev Pai

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