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Informist, Tuesday, Nov. 12, 2024

By Alina Geogy

MUMBAI – The Nifty 50 is expected to extend losses to the fifth straight session Wednesday due to selling by foreign institutional investors and disappointing earnings reported by most companies for the September quarter, analysts said. Investors may take cues from the inflation data from the US for October and Jul-Sept earnings of some more companies, as the earnings season nears a close this week.

Banking stocks are expected to fall more in the next session, as foreign institutional investors continue to pull out money from the domestic market, according to analysts. Banking stocks are likely to be the most affected as overseas investors have the largest holding in this sector in the domestic market, according to analysts. However, some research analysts said the downside for this sector would be limited owing to healthy earnings by most banks for the September quarter and comparatively better valuations, which could encourage some bounce-back buying, analysts said. On Tuesday, a decline in banking stocks was the key reason for the over 1% decline in the benchmark indices.

Shares of Britannia Industries, which fell over 7% Tuesday, may see more declines over the next few sessions. Most fast-moving consumer goods companies have experienced margin pressure for Jul-Sept and this may continue to be a worry for these companies in upcoming quarters, a research analyst at a domestic broking house said. The company's management, in a post-earnings conference call Tuesday, said it expects some impact on its sales volumes in the next six to nine months. It also said it would raise prices across its entire portfolio by 4-5% in the coming two months to cover rising raw material costs and maintain margins.

Meanwhile, information technology stocks are expected to withstand the current overall pressure in the market and rise again Wednesday. Decent quarterly earnings for the September quarter and positive expectations that these companies could benefit from an improved business scenario in the US under Donald Trump's presidency are factors expected to boost gains in these stocks in the near term, analysts said.

The Nifty 50 index closed 1.1% lower at 23883.45 points and the Sensex ended 1% lower at 78675.18 points. The weakness in the market is likely to continue as long as the Nifty 50 remains below 24000 points, Shrikant Chouhan, head of equity research at Kotak Securities, said in a note. "Below the same (24000), the correction wave could continue till 23800," Chouhan said. However, a rise above 24000 points could change the sentiment, he said.

Market participants await the listing of shares of Swiggy and ACME Solar Holdings on the exchanges, expected Wednesday. Shares of Sagility India, which listed on the exchanges Tuesday, will be closely watched over the coming days. The stock closed below its issue price after listing at a premium of 3.5% on both exchanges. Shares of Sagility India are at a high valuation, and the company also has no peers in its segment, which is commanding a very high price-to-earnings ratio, a research analyst at a domestic brokerage firm said. The stock is expected to remain below its issue price in the near-term, the analyst said.

With respect to initial public offerings, Bengaluru-based Zinka Logistics Solutions' issue will open for subscription Wednesday and close Monday. The price band for the offering has been set at INR 259-INR 273 per share.

Shares of KNR Constructions could rise after the company reported a net profit of INR 3.34 billion for the September quarter, higher than analysts' estimate of INR 858.88 million. Shares of FSN E-Commerce Ventures could take a hit after the company's bottom line for Jul-Sept missed analysts' estimates by a wide margin. Shares of NMDC Steel would also be in focus after the company said its net loss for the September quarter widened on year despite revenue rising over fivefold.

Investors await quarterly earnings of Eicher Motors, due Wednesday. The automobile company is expected to report healthy growth in key earnings metrics for the September quarter, primarily driven by higher average selling prices due to price hikes, a richer product mix, and an improvement in exports, which will help offset the impact of flattish overall volumes on account of lower two-wheeler dispatches.  End

Edited by Tanima Banerjee

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