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Informist, Wednesday, Nov. 13, 2024

By Anjali Singh

MUMBAI – The benchmark indices fell more than 1% for the second straight session and closed at a four-month low Wednesday. Amid broad-based selling, only five stocks in the Nifty 50 closed higher. The fall was due to weak domestic fundamentals and a sharp rise in the benchmark 10-year US Treasury yield. Persistent selling by foreign investors has also dented investor sentiment.

The sharp rise in US Treasury yields and weakness in the US and Asian share indices are the main reasons the market fell Wednesday, Ambrish Agarwal, director at Eastern Financiers, said. The 10-year US Treasury yield closed at 4.43% Tuesday, up 13 basis points from the previous close. The rise in US Treasury yields points to less probability of an aggressive rate cut by the US Federal Reserve. According to CME FedWatch Tool, the odds of another 25 basis points cut in the next Fed meeting have fallen to 65.8%, compared to 70% a week ago. On the other hand, the probability of the rates remaining steady have risen to 34.2% from 29.5% a week ago.

The Nifty 50 extended losses for the fifth straight session and closed at 23559.05 points, down 324.40 points or 1.4%. The Sensex closed at 77690.95 points, down 984.23 points or 1.3%. The Nifty 50 and Sensex fell to over four-month lows of 23509.60 points and 77533.30 points, respectively. The 50-stock index and 30-stock index have fallen around 10% from their record highs of 26277.35 points and 85978.25 points, respectively, hit on Sept. 27.

The India VIX, the market's fear-gauge, closed nearly 6% higher at 15.4350 on the day of the weekly expiry of Nifty Bank derivatives contracts.

The Nifty small-cap indices closed down 2.9-3.1%, and the Nifty mid-cap indices closed 2.4-2.7% lower each. "It's a broad-based selling and more selling is possible," a technical analyst at a domestic brokerage said. The Nifty Smallcap 250 index closed 3.1% lower at 16670.35 points. The analyst expects the index to fall to around 16500 points.

All the sectoral indices closed in the red, with Nifty Realty and Nifty PSU Bank falling the most. The Nifty FMCG and Nifty IT fell the least.

Shares of banks and financial services were a drag on the headline indices. Fall in shares of index heavyweights HDFC Bank and ICICI Bank pulled the Nifty 50 down by 0.3%. "The selling by FIIs is a major drawback for banks," Osho Krishan, technical and derivatives analyst at broking firm Angel One, said. However, Krishan said the undertone is bullish in private bank index heavyweight stocks, which are better placed than the mid-cap banking stocks. The valuations are relatively comfortable in banks, Agarwal of Eastern Financiers said.

Shares of automobile companies such as Eicher Motors, Hero MotoCorp, and Mahindra & Mahindra closed lower by 3.2-4.3% and were among the worst hit in the Nifty 50 index. Due to this, the Nifty Auto index closed the session 2.2% lower. The fall in auto stocks was despite data by the Society of Indian Automobile Manufacturers showing an almost 13% on-year rise in production and sales in India's automobile sector in Apr-Oct, and an over 15% rise in exports. The overall vehicle sales volume was driven by healthy growth in two-wheeler despatches due to an improvement in rural demand on the back of a good monsoon. Overall vehicle despatches to dealerships in India rose 11.5% on year to 2.63 million units in October, in anticipation of strong consumer demand during the Dussehra and Diwali festivals.

Shares of Hindalco Industries closed nearly 4% lower due to near-term headwinds as its US-based subsidiary Novelis withdrew its earnings guidance. Nuvama Institutional Equities and Emkay Global Financial Services said they have a weak near-term outlook for the company's US arm.

Shares of Acme Solar Holdings and Swiggy listed on the exchanges Wednesday. Acme Solar listed at over 13% discount to the issue price, while Swiggy listed at nearly 8% premium to its issue price. Shares of Swiggy closed nearly 17% higher at INR 456. According to JM Financial, Swiggy's grocery delivery service, Instamart, has immense potential to grow. The brokerage firm has a 'buy' rating on the stock with a target price of INR 470.

Shares of ACME Solar Holdings closed more than 12% lower. Broking firm KR Choksey, which had a 'subscribe' rating for the initial public offering, said it values the shares of ACME at 23 times the company's enterprise value to earnings before interest, taxes, depreciation, and amortisation. The brokerage also said that the stock looks cheaper compared to its peers and offers attractive growth potential.

Shares of Techno Electric and Engineering Co. closed 9.6% lower after the company posted a fall in its revenue for the September quarter late Tuesday. Shares of Alkem Laboratories recovered and closed over 1% higher after the company's consolidated net profit came in higher-than-expected.

* Of the Nifty 50 stocks, 5 rose and 45 fell

* Of the Sensex stocks, 4 rose and 26 fell

* On the NSE, 419 stocks rose, 2,394 fell, and 48 were unchanged

* On the BSE, 690 stocks rose, 3,299 fell, and 98 were unchanged

* Nifty Realty: down 3.17%; Nifty PSU Bank: down 3.08%; Nifty FMCG: down 0.45%

BSE                                               NSE

Sensex: 77690.95, down 984.23 points or 1.25%     Nifty 50: 23559.05, down 324.40 points or 1.36%

End

Edited by Ashish Shirke

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