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Informist, Friday, Nov. 8, 2024

By Alina Geogy

MUMBAI – The benchmark indices ended the week with losses as uncertainty over policy changes in the US and the recent relentless selling by foreign institutional investors dented investor sentiment, analysts said. Investors digested the US Federal Reserve's decision to trim key interest rates by 25 basis points earlier in the day, but unlike in some other markets, this did not lead to any cheer in the domestic market as the rate cut had been largely factored in, they said. 

Indices ended the week down, the fifth fall in six weeks after the positive weekly close last week. This week was marked by major global developments such as the US presidential elections, a rate cut by the Bank of England, and a rate cut by the US Fed. While domestic investors had Wednesday cheered Donald Trump's comeback to the White House after a gap of four years, they were soon faced with uncertainty about the policy changes in the US and its effect on emerging markets. Analysts have already warned that foreign portfolio investors could move funds to the US from emerging markets owing to better growth prospects under Trump.

US production of goods is expected to rise, supported by Trump's proposed tariff hikes on imports and cuts in the corporate tax rate, said Vinit Bolinjkar, head of research at Ventura Securities. This will ensure the economy gets back on its feet very quickly, even if it takes at least two years to happen, he said. Domestic investors were already wary of overseas investors offloading shares in the Indian stock market and moving to more lucrative markets, such as China, particularly because of recent economic stimulus measures and cheaper valuations.

The Nifty 50 index was lower for most of the session Friday, after brief volatility in early trade. It ended at 24148.20 points, down 51.15 points or 0.2% owing to losses in shares of Reliance Industries, followed by those of ICICI Bank and State Bank of India. The initial volatility had taken the Nifty 50 down as much as 0.6% or over 130 points to an intraday low of 24066.65 points. But gains in some banking stocks such as HDFC Bank helped the index recover some losses and even attempt a short-lived recovery. The BSE Sensex ended at 79486.32 points, down 55.47 points or 0.1%. Both indices extended losses for the second straight session Friday, and fell 0.3-0.6% this week.

The decline in the benchmark index was slightly arrested by gains in information technology stocks, which gained following a rate cut in the US. Expectations are that the rate cut will boost discretionary spending by clients, thereby resulting in increased business for Indian IT companies. The Nifty IT index closed up nearly 1% and was the best performing sectoral index throughout the session. Shares of Tech Mahindra, Infosys, and Wipro gained 1-2% and were the top gainers in the Nifty 50 index.

Despite closing slightly lower, the decline in the indices was not as sharp as Thursday, when selling took the indices down over 1% each. "The market is not having much downside momentum at this current point in time," Bolinjkar said. Somehow, there are buyers at lower levels now, particularly after the selling pressure which brought the Nifty 50 down to 24000 levels from 26000 points, he said. Around 30% of all stocks traded on exchanges still managed to end with gains despite the overall market being down.

The fall in the broader market indices was sharper than the benchmarks, with the Nifty mid- and small-cap indices closing 1-2% lower. All broader market indices fell for the second consecutive week. Among sectoral indices, Nifty IT and Nifty Consumer Durables were the top gainers, while Nifty Realty, Nifty Media, and Nifty PSU Bank were the worst hit. All sectoral indices, except Nifty IT, Nifty PSU Bank, Nifty Healthcare, and Nifty Consumer Durables ended with weekly losses. The Nifty IT index gained 4% this week, while Nifty Realty fell 4%.

Shares of Reliance Industries extended losses for the second consecutive day and ended down nearly 2% at a 10-month low. The stock has underperformed the benchmark for over 52 weeks now. It has fallen over 8% in the last 30 days, while the Nifty 50 has fallen only around 3% in the same period. The recent decline in the stock comes amid the loss of subscribers for the company's telecom business, Reliance Jio Infocomm, and pressure on its oil-to—chemical and retail segments, analysts said. Shares of Trent fell over 3% to a near three-month low, extending losses from Thursday after the retail company reported a weaker-than-expected revenue for the September quarter.

Shares of Indian Hotels and Page Industries closed up around 7% each and were among the top gainers in the Nifty 200 index. Both companies had reported better-than-expected earnings for the September quarter. On the other hand, shares of Cochin Shipyard were among the worst hit in the Nifty 200 after they closed down 5% after hitting a lower circuit. The shipbuilding and repair company had reported a lower-than-expected net profit for the September quarter late Thursday.

* Of the Nifty 50 stocks, 23 rose and 27 fell

* Of the Sensex stocks, 17 rose and 13 fell

* On the NSE, 1866 stocks rose, 1,945 fell, and 66 were unchanged

* On the BSE, 1,346 stocks rose, 2,635 fell, and 83 were unchanged

* Nifty Realty: down 2.9%; Nifty Media: down 2.1%; Nifty IT: up 0.7%

BSE                                               NSE

Sensex: 79486.32, down 55.47 points or 0.1%       Nifty 50: 24148.20, down 51.15 points or 0.2%

End

Edited by Akul Nishant Akhoury

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