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Informist, Monday, Oct. 28, 2024

By Alina Geogy

MUMBAI – Benchmark indices could extend gains in the next session but the recent selling by foreign investors and subdued quarterly earnings by most of the companies are likely to keep gains muted, analysts said. Signals of easing tensions in West Asia which led to a sharp drop in crude oil prices Monday may also boost investor sentiments, they said. Corporate earnings will continue to be in focus, with as many as four Nifty 50 companies scheduled to announce their quarterly numbers on Tuesday.    

The benchmark indices snapped a five-day losing streak Monday and recovered some of the losses from the previous session owing to gains in some banking and heavyweight stocks. These gains will be sustainable only if the Nifty 50 index crosses and sustains above 24500 points, a research analyst at a domestic broking firm said. Until then, it will be difficult to say if the gains seen Monday may be the beginning of a trend reversal, the analyst said. The Nifty 50 is now around 160 points lower than the crucial hurdle of 24500 points.

Analysts warned that the decline in the benchmark indices, which had deepened last week, could resume if the indices fail to sustain gains above these levels. While resistance for the Nifty 50 is seen at 24500 points, the support level is at 24100 points, according to technical analysts. On Monday, the Nifty 50 closed 0.7% higher at 24339.15 points and the BSE Sensex closed 0.8% higher at 80005.04 points.

Continuous selling by foreign portfolio investors, which offloaded domestic shares worth nearly INR 900 billion in October so far, has severely dented investor sentiment. The FPI selling, coupled with weaker-than-expected earnings by several firms for the September quarter, and worries about negative geopolitical developments had hurt the gains in the market seen over the past four months. Both the benchmark indices have fallen around 7% from the all-time highs notched a month back.

Among sectors, banks are expected to extend gains over recent healthy earnings by some banking majors and comparatively cheaper stock valuations, analysts said. The Nifty Bank index underperformed the Nifty 50 recently, so this sector is now expected to pick up, a research analyst at a domestic brokerage company said. Good earnings from ICICI Bank may also help sentiment towards the sector, the analyst said. Valuations of some banking stocks are also not stretched, which is a positive for these stocks amid worries of expensive valuations in the overall market, the analyst said.

The Nifty Bank index ended at 51259.30 points, up nearly 1%, Monday. The index has fallen only 3% so far this month, in comparison to the Nifty 50 which is down nearly 7% during the same period. The public sector banks showed notable strength Monday, and it is recommended to focus on such themes for potential outperforming opportunities, Rajesh Bhosale, equity technical analyst at Angel One, said in a note.

Shares of Bharti Airtel may take a hit Tuesday after the telecom company reported a weaker-than-expected consolidated net profit for the September quarter due to a one-time cost incurred on account of foreign exchange loss. However, it posted healthy growth in other earnings parameters driven by strong momentum in the Indian business and growth in constant currency in its operations in Africa. Bharti Airtel reported its quarterly earnings after market hours Monday.

Shares of Adani Ports and Special Economic Zone, Maruti Suzuki India, Adani Enterprises, and Cipla will be in focus as these firms will report earnings on Tuesday. Shares of Tata Technologies may fall after the company's net profit for the September quarter fell slightly on year. Investors may also react to the earnings of Federal Bank, which reported slightly better-than-expected net profit for the September quarter.

Shares of Aegis Logistics will be in focus Tuesday after the company said its subsidiary Aegis Vopak Terminals' board approved an initial public offering to raise up to INR 40 billion. Aegis Vopak also approved raising up to INR 8 billion via preferential issue.  End

Edited by Saji George Titus

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