More Stories

Informist, Wednesday, Oct. 30, 2024

By Alina Geogy

MUMBAI – The benchmark indices snapped a two-day rising streak and ended lower Wednesday. The decline came on the back of losses in banking stocks, which fell as investors probably took out profits following sharp gains over the past two days and also on sales by foreign institutional investors, analysts said. Losses in these stocks offset gains in automobile stocks, which rose on expectations of improvement in automotive sales in the ongoing festive season, analysts said.

After a slightly weak opening Wednesday, the Nifty 50 and Sensex came off lows and even recovered for a few minutes, supported by gains in automobile stocks. But widening losses in banking stocks ensured that both indices fell again and closed lower. The Nifty 50 and the Sensex each closed 0.5% lower at 24340.85 points and 79942.18 points, respectively. The indices ended around 0.8% lower from their intraday highs. Both indices are now down 7% from their record highs hit a month back.

Banking stocks were among the top gainers in the previous two sessions, during which the Nifty Bank rose a total of 3%. Gains in these stocks had helped the benchmark indices snap a five-day declining streak Monday. However, the sectoral index ended 1% lower Wednesday, with 9 of its 12 constituents closing lower on the day of expiry of the Nifty Bank weekly and monthly derivatives contracts. Shares of HDFC Bank, Axis Bank, Kotak Mahindra Bank, and ICICI Bank ended down 1-2%.

FIIs have the largest holding in banking and financial stocks, Asutosh Mishra, lead banking, financial services, and insurance analyst and head of research, institutional equity, at Ashika Stock Broking said. Now, with continued selling by these investors this month, bank stocks were expected to take a hit, he said. Foreign portfolio investors have sold shares worth nearly INR 920 billion in October.

Bank stocks may remain volatile until the selling by FIIs slows down, which has become difficult to predict now, Mishra said. Despite losses Wednesday, the outlook for bank stocks remains positive, particularly after several banks reported stronger-than-expected results for the September quarter and strengthened expectations that the sector would outperform most other sectors.

Automobile stocks were among the major gainers in the session, with shares of Maruti Suzuki India, Hero MotoCorp, and Bajaj Auto ending 1-3% higher. These stocks had fallen sharply Tuesday after auto major Maruti Suzuki posted lower-than-expected earnings for the September quarter. However, the company's positive commentary about growth in retail sales of passenger vehicles in the festival season helped the stocks recover some of the losses of the previous session. 

The managements of automobile companies have said in their post-earnings commentaries that they expect better sales because of higher demand in the Diwali festival season, Mitul Shah, executive director of research and auto stocks analyst at DAM Capital Advisors, said. Maruti Suzuki Tuesday said retail sales of passenger vehicles are likely to have grown 14% on year during the festival season. The company also spoke of a fall in inventory levels to an ideal scenario, which is again a positive for these companies, Shah said. There were some concerns about high inventory levels and lower-than-expected demand at the beginning of the festival season, which had led to some correction in auto stocks this month. The recent correction has turned these stocks somewhat reasonably valued and maybe even attractive, Shah said.

Pharmaceutical stocks were also among the worst-hit Wednesday. Drugmaker Cipla's management Tuesday cut the lower band of its guidance for sales in the US, which triggered selling in the stock and took it down 4%. The stock was the worst hit Nifty 50 constituent. The company's sales in the US in the December quarter are likely to be weaker than in Jul-Sept owing to supply challenges, analysts said. Factors such as the pending clearance of its Goa facility by the US Food and Drug Administration and the weak outlook for US sales in Oct-Dec may weigh more on the stock in the near term, they said. The Nifty Pharma and Nifty Healthcare indices fell 1% each and were among the worst hit sectoral indices.

Among other stocks, shares of Adani Enterprises extended gains from Tuesday when the company said its consolidated net profit for Jul-Sept rose nearly eight times on year to INR 17.41 billion. The stock ended over 4% higher, becoming the top gainer in the Nifty 50. Shares of Bharat Electronics ended nearly 2% higher, extending gains for the second consecutive session after strong earnings for the September quarter boosted sentiment towards the stock, along with positive commentary from brokerage houses.

Shares of some defence and railway-linked companies also rose and were among the top gainers in the broader market. Of these, shares of Cochin Shipyard rose 5% and hit an upper circuit, while those of Data Patterns (India) ended over 12% higher. Shares of Indian Railway Finance Corp. ended over 8% up.

Shares of Godavari Biorefineries, an ethanol manufacturer, listed at INR 308 on the NSE, at a discount of 12.5% to the issue price of INR 352. However, the Mumbai-based company's stock rose slightly after listing and ended at INR 343.20, down only 2.5% from the issue price.

* Of the Nifty 50 stocks, 20 rose and 30 fell

* Of the Sensex stocks, 12 rose and 18 fell

* On the NSE, 2,093 stocks rose, 691 fell, and 66 were unchanged

* On the BSE, 2,857 stocks rose, 1,075 fell, and 79 were unchanged

* Nifty Financial Services: down 1.3%; Nifty Consumer Durables: down 1.2%; Nifty Media: up 2.3%

BSE                                               NSE

Sensex: 79942.18, down 426.85 points or 0.53%     Nifty 50: 24340.85, down 126 points or 0.51%

End

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.