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Informist, Wednesday, Oct. 30, 2024

By Alina Geogy

MUMBAI – Benchmark equity indices are expected to fall again in the next trading session on Thursday, analysts said. Investor sentiment could take a hit because of subdued earnings growth by companies across most sectors and persistent selling by institutional investors based overseas, according to analysts. Amid expensive valuations, worries about a larger correction in the market after four straight months of gains may also discourage investors, analysts said.

While the near-term outlook for some sectors, such as automotive and banking, is positive due to either strong earnings or bullish management commentary, other sectors have not impressed much on the earnings front, analysts said. This could weigh on the market, resulting in some consolidation. The September quarter earnings are "not as good as the market expected, but it is also not towards the extreme lower end", the head of research at a domestic brokerage firm said. As a consequence, key indices will likely consolidate this week amid mixed earnings, analysts said.

The volatility in the market is expected to continue till the results of the US presidential elections are declared next week, the head of research said. The chances of Donald Trump winning the presidential election are increasing as per betting markets in the US, he said. A win for Donald Trump is being seen as a positive for US-based companies as he may bring about favourable changes, such as a cut in corporate tax in the US.

"The Fed (US Federal Reserve) will turn more hawkish (than the market pricing in currently) under the new government if growth risks do not emerge and more so in case of a Republican sweep," Elara Securities (India) said in a report. Compared to Kamala Harris, who plans to raise corporate tax and capital gains tax, it will be favourable for equities if Donald Trump wins, the report said.

The support for the Nifty 50 is seen at 24250-24200 points. The upper end of this range is 0.4% or 90.85 points lower than the Nifty 50's closing level on Wednesday. The resistance for the 50-stock index is seen at 24500-24550 points. On Wednesday, the Nifty 50 and the BSE Sensex closed 0.5% lower each at 24340.85 points and 79942.18 points, respectively. Meanwhile, the India VIX, a key indicator of volatility in the market, closed 6.9% higher at 15.51 on Wednesday, rising for the second consecutive session.

"Our data analysis over the past 10 years shows that markets have closed in the red only three times during the Muhurat trading session. This indicates some likely festive cheer in coming trading sessions," Vikram Kasat, head of advisory at Prabhudas Lilladher, said in a note. Domestic stock exchanges will conduct the Diwali Muhurat trading session for an hour on Friday. The pre-open session will start at 1745 IST and the special live trading session will begin at 1800 IST and end at 1900 IST.

Shares of Larsen & Toubro will be in focus Thursday as investors will assess its quarterly earnings released after market hours Wednesday. L&T's earnings for the September quarter beat the Street's expectations, even though growth in its consolidated net profit was muted. The bottom line rose 5.4% on year to INR 33.95 billion in the September quarter, while revenue from operations rose 20.6% on year to INR 615.55 billion. The company said the revenue growth came on the back of progress in various businesses in its projects and manufacturing portfolio.

Investors now await the monthly automobile sales data, scheduled to be reported later this week. The auto sales data for October may show the demand trends around the Diwali festival. This gains significance after recent comments by major automakers about an improvement in demand during the festive season. Automobile stocks are at comfortable valuations now, particularly as these had corrected over the past month owing to worries about sales taking a hit due to muted demand, analysts said.  End

Edited by Saji George Titus

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