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Informist, Thursday, Oct. 31, 2024

By Alina Geogy

MUMBAI – Benchmark indices fell for a second consecutive day Thursday as losses in banking and information technology stocks offset sharp gains in shares of select construction and pharmaceutical companies. Subdued earnings growth by companies across most sectors for the September quarter and relentless selling by foreign institutional investors this month are the key reasons for the decline, analysts said. Expensive valuations and worries about a larger correction in Indian equities after four straight months of gains also weighed on the sentiments, analysts said.

The market has now resumed its month-long correction after a break of two days earlier this week when the indices ended higher. The indices have ended down in seven of the past nine sessions. The decline on benchmark indices on Thursday is on account of heavy selling by FIIs, the head of research at a Mumbai-based brokerage firm said. FIIs have been net sellers in the market for 23 consecutive days. So far in October, foreign portfolio investors have net sold shares worth INR 940 billion. If the trend continues, the Nifty 50 is expected to test the 24000-point level over the next two sessions, the head of research said.

The indices had opened marginally higher but fell gradually during the session because of widening losses in banking and information technology stocks. The two sectors weighed most on the indices and took the Nifty 50 down 0.6% to 24205.35 points and the BSE Sensex down 0.7% to 79389.06 points. Despite losses in the last two days, the Nifty 50 is still up 0.1% this week, while the BSE Sensex is now on track to clock its fifth straight week of losses. The Nifty 50 has been falling for four consecutive weeks.

Around 65% of all stocks traded on the exchanges ended higher despite the decline in the benchmark indices. The Nifty small-cap indices ended over 1% higher, while the Nifty mid-cap ones ended slightly lower. In fact, over 200 stocks traded on the NSE hit the upper circuit while 60 stocks were at a 52-week high.

Information technology stocks were the worst hit in the session and mirrored losses in the US market, where some semiconductor stocks fell Wednesday after soft commentary by some companies about revenue growth for the coming quarters. French IT firm Capgemini cut its guidance for revenue for the year after its quarterly earnings were affected by stronger-than-expected headwinds, particularly in manufacturing. Shares of HCL Technologies, Infosys, Tata Consultancy Services, Wipro, and Tech Mahindra closed down 2-5% and were the worst hit in the Nifty 50. As a consequence, the Nifty IT index became the worst performer amongst sectoral indices, closing 3% down at a two-month low.

On the other hand, shares of Cipla and Larsen & Toubro were the top gainers in the Nifty 50 index and sharp gains in these stocks prevented the benchmark index from falling further. Shares of L&T ended up over 6% higher near a one-month high. The company maintained its margin guidance for 2024-25 (Apr-Mar) at 8.25%, and also retained its guidance for order inflow growth of 10% and revenue growth of 15%. Analysts were positive on the stock owing to healthy prospects of order inflows, stable margin, and strong revenue visibility.

Shares of Cipla gained over 9% after the company announced the US Food & Drug Administration tagged its manufacturing facility in Goa with 'voluntary action indicated' status. This classification is a positive development for the company as it could accelerate the launch of the cancer drug Abraxane generic in the US, analysts said. The Street had expected the US launch of the Abraxane generic in 2025-26 (Apr-Mar), assistant vice president of research at a domestic brokerage firm said. However, this classification, which is a positive surprise, may help advance the launch to December or March quarter of this financial year, the assistant vice president of research said.

Besides the cancer drug, there are several other major products which are manufactured at Cipla's Goa facility. Overall, this development may ease the supply pressures on the US side, the assistant vice president said. Though Cipla's earnings for the September quarter met analysts' expectations, it was the company's lowest growth in the last six quarters as slow growth in the Indian and North American markets weighed. The stock had seen a steep correction over the last two months, but the gains seen in the session Thursday are likely to sustain, analysts said.

Automobile stocks remained under the radar after recent management commentary by Maruti Suzuki India pointing to an improvement in demand during the Diwali festival. These stocks ended mixed, with the Nifty Auto closing slightly lower. Shares of Maruti Suzuki and Tata Motors ended down, while those of Hero MotoCorp and Mahindra & Mahindra ended higher.

Among other stocks, shares of Saregama India ended up 5.5% after brokerage firm Nuvama Institutional Equities initiated coverage on the stock with a 'buy' rating. Shares of Jupiter Wagons closed 6% higher after the company's subsidiary, Jupiter Electric Mobility, acquired the railway and electric truck battery operations of Log9 Materials.

* Of the Nifty 50 stocks, 13 rose and 37 fell

* Of the Sensex stocks, 4 rose and 26 fell

* On the NSE, 1,819 stocks rose, 942 fell, and 89 were unchanged

* On the BSE, 2,652 stocks rose, 1,264 fell, and 110 were unchanged

* Nifty IT: down 3%; Nifty Consumer Durables: down 1%; Nifty Media: up 1.8%

BSE                                               NSE

Sensex: 79389.06, down 553.12 points or 0.69%     Nifty 50: 24205.35, down 135.50 points or 0.56%

End

Edited by Saji George Titus

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