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Informist, Thursday, Oct. 17, 2024

By Alina Geogy

MUMBAI – Indian equities are likely to fall again Friday, with the benchmark indices expected to end with weekly losses for the third time in a row. Information technology stocks, which were among the sole gainers in the market Thursday, will be eyed after Wipro and Infosys released their earnings. Investor sentiment is likely to remain dented after companies that posted earnings so far failed to impress.

While Infosys reported sequential growth in both consolidated revenue and net profit for Jul-Sept, its bottom line figure fell short of analysts' expectations. Even the revision in guidance was lower than expectations, as the company raised its revenue growth guidance in constant currency terms to 3.75-4.50% for 2024-25 (Apr-Mar) from 3-4% earlier, lower than the expectation of 4-5%. 

Shares of Infosys rose 2.5% Thursday. Analysts said the stock could extend these gains over the next few days if there were any positive surprises in its earnings. If the company's commentary is better-than-expected, the stock could rise as much as 5% on Friday, a research analyst at a domestic brokerage firm said. Shares of Wipro may rise Friday after the company reported its highest sequential profit and revenue growth in seven quarters with its Jul-Sept earnings.

Shares of Axis Bank may rise after the private lender's net profit for the September quarter rose 18% on year, slightly higher than expectations of an 11% increase. The bank's net profit grew due to a rise in income and a marginal improvement in asset quality. Investors may also react to the earnings of more companies which released quarterly earnings after the market closed, such as LTIMindtree, Polycab India, Tata Chemicals, and Tanla Platforms.

Tata Consumer Products is scheduled to report Jul-Sept earnings Friday. Decline in tea sales volumes and the monsoon floods hitting consumer demand is expected to weigh on the company's quarterly performance. ICICI LombArd General Insurance Co, Jio Financial Services, and Oberoi Realty are also slated to post their quarterly results Friday.

Shares of city gas distribution companies will be on the radar after some companies announced that the government has reduced the allocation of gas to these companies. Mahanagar Gas' allocation for transport CNG was reduced by around 20% as compared to the previous allocation, while Indraprastha Gas' allocation for domestic gas was cut by 21%. Both companies said this reduction in gas allocation would impact their profitability.

The market texture is weak and the sentiment is likely to continue as long as the Nifty 50 remains below 24900 points, Shrikant Chouhan, head of equity research at Kotak Securities, said. The support for the index is pegged around 24500-24400 points, he said. On the flip side, the Nifty 50 could have a quick pull-back rally to 24850-24900 points if it manages to sustain above 24825 points, he said. On Thursday, the Nifty 50 closed 0.9% lower at 24749.85 points and the BSE Sensex closed 0.6% lower at 81006.61 points. 

The market is still on the lower side because the net sales by foreign portfolio investors outsize the net purchases by domestic investors, a research analyst said. However, there has been no vertical decline because of continued support by domestic investors, the analyst said. Without this support, the market could have fallen 20-25%, the analyst said.

Market watchers expect net selling by overseas investors to continue till January. Foreign portfolio investors have net sold shares worth over INR 670 billion in October so far, marking a trend reversal after four months. Meanwhile, domestic institutional investors net bought shares worth INR 630 billion, the analyst said.  End

Edited by Saji George Titus

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