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Informist, Monday, Oct. 28, 2024

By Alina Geogy

MUMBAI – Benchmark indices snapped a five-day losing streak and ended in the green Monday after better-than-expected earnings from banking majors over the weekend and a fall in global crude oil prices soothed investors amid sharp losses in the market this month.

Around 65% of all stocks traded on the exchanges ended with gains Monday, a reversal from the scenario in the previous session when nearly 80% ended with losses. On Monday, the Nifty 50 closed 0.7% higher at 24339.15 points and the Sensex closed 0.8% higher at 80005.04 points. Both indices had risen over 1% during the day. In the last five sessions, the Nifty 50 lost over 2% and the Sensex lost nearly 3%.

There were a couple of factors which supported the market, particularly the strong September quarter earnings from ICICI Bank and Bank of Baroda, which boosted gains in most banking stocks, Astha Jain, senior research analyst at Hem Securities said. These may have indicated that there is still some steam left in India Inc. on the earnings front, she said. Stocks of banks and financial service providers, led by shares of ICICI Bank, were the major contributors to the gains in the Nifty 50 index.

Shares of ICICI Bank ended 3% higher, shedding some gains from earlier in the day when the stock rose over 4% to a one-month-high. The stock gained after the bank reported a net profit of INR 117.46 billion for the September quarter, up 14.5% on year and higher than analysts' expectations. This rise in its bottom line was supported by steady loan growth and a fall in non-performing assets. Several brokerage firms raised the target prices for the stock following the robust earnings. ICICI Bank has not only outperformed its peers on Jul-Sept earnings, it has delivered strong results in a weak environment that most banks cannot deliver even in a strong macro, Nuvama Institutional Equities said.

The healthy earnings came as a relief for investors, who were worried about a slowdown in the financial performance and near-term growth outlook for companies after several of them reported weaker-than-expected earnings for the September quarter, analysts said. Besides earnings, the fall in crude oil prices is also supporting the market, Jain of Hem Securities said. The Brent crude December futures contract fell to a near-one-month low of $71.29 per barrel Monday. At 1600 IST, the contract traded at $71.47 per barrel, down 6%, on the Intercontinental Exchange.

Prices of the commodity fell sharply as market participants felt tensions in West Asia were easing and Iran's oil production would not be affected, analysts said. Israel's attack on Iran over the weekend had a more limited impact than expected and no nuclear or oil infrastructure was targeted, clearly signalling a de-escalation of tensions, Swissquote Bank said, according to a Dow Jones report.

All sectoral indices ended higher Monday. Of these, the Nifty PSU Bank, Nifty Metal, and Nifty Media indices were the best performers. The Nifty PSU Bank ended nearly 4% higher, with all 12 constituents in the green. Shares of Indian Bank, Bank Of Baroda, and Canara Bank were the top gainers and ended up around 11%, 7%, and 4%, respectively. Shares of Indian Bank surged after the bank's net profit for Jul-Sept rose more than analysts' estimates. Bank of Baroda also reported better-than-expected earnings for the September quarter.

Valuations of bank stocks are at relatively comfortable levels now and lower than their past averages, a research analyst at a domestic brokerage said. Banking and financial stocks were most affected by the recent selling by foreign institutional investors as a large portion of their investment is in this sector, analysts said. This has made the valuations of these stocks more appealing to investors, they said.

Corporate earnings for the September quarter continued to result in stock-specific movements. Shares of Shriram Finance ended up over 5% after the non-banking finance company reported an 18% on-year rise in net profit for the September quarter, after which several brokerages shared positive views on the stock. Continued improvement in growth with a focus on high yielding segments, steady cost of funds, and gradual improvement in asset quality are positives for the company, ICICI Direct said in a report.

On the other hand, shares of Coal India fell over 4% after the company's net profit for the September quarter missed estimates. The net profit fell nearly 22% on year to INR 62.9 billion, lower than the INR 72.47 billion expected. Despite this, brokerages Axis Securities and Emkay Global Financial Services maintained their 'buy' ratings on the stock. Emkay Global said it expects a recovery in the second half of the financial year and sees any correction as an opportunity. 

Shares of Bharat Heavy Electricals ended up 6% after hitting a 10% upper circuit. The company posted a net profit of INR 966.7 million in Jul-Sept compared to a loss in the year-ago period. Shares of Sun Pharmaceutical Industries extended gains slightly after the company reported a consolidated net profit of INR 30.40 billion for Jul-Sept, slightly higher than analysts' estimates. Shares of Interglobe Aviation ended 8% lower after the aviation company reported a net loss for the September quarter, a first in seven quarters, due to higher fuel costs and grounding of aircraft. The company had reported its earnings after market hours Friday.

Shares of Waaree Energies, a solar photovoltaic module maker, sustained most gains after listing at a premium on the exchanges Monday. On the NSE, the stock ended up nearly 56% after listing at a premium of 66% to the issue price. On the other hand, shares of Deepak Builders & Engineers India ended over 20% lower after debuting at a discount of 1.5% to the issue price.

* Of the Nifty 50 stocks, 36 rose and 14 fell

* Of the Sensex stocks, 23 rose and 7 fell

* On the NSE, 1,906 stocks rose, 931 fell, and 71 were unchanged

* On the BSE, 2,579 stocks rose, 1,412 fell, and 162 were unchanged

* Nifty PSU Bank: up 3.8%; Nifty Metal: up 2.5%; Nifty Energy: up 0.2%

BSE                                               NSE

Sensex: 80005.04, up 602.75 points or 0.76%       Nifty 50: 24339.15, up 158.35 points or 0.65%

End

Edited by Tanima Banerjee

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