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Informist, Wednesday, Nov. 13, 2024

By Anjali Singh

MUMBAI – Domestic benchmark indices are expected to fall more on Thursday, but the losses are likely to be limited as some analysts see the market stabilising around the current levels. With weak fundamentals, earnings downgrades, persistent selling by foreign investors, and a sharp rise in US Treasury yields, market sentiment is expected to remain negative. Investors now await the US CPI for October, due later Wednesday, and Jul-Sept earnings of Grasim Industries and Hero MotoCorp, due Thursday.

"We are in oversold territory, so anytime now we can see the market moving up," Osho Krishan, technical and derivative analyst at Angel One, said. On Wednesday, the Nifty 50 closed 1.4% lower at 23559.05 points and the Sensex closed 1.3% lower at 77690.95 points. The support for the Nifty 50 is seen at 23500 points, while the resistance is seen at 24000 points. 

"Immediate resistance is now seen around 23800, followed by 24000, while further weakness could drag prices towards the (50-exponential moving average) at 23200, which aligns with the 61.8% retracement of the rally from the election result day," Rajesh Bhosale, equity technical analyst at Angel One, said in a note. There may be a rebound, given the oversold conditions and as the benchmark index, Nifty Bank, broader market indices retested their support levels, Ajit Mishra, senior vice president of research at Religare Broking said in a note.

Despite a sharp correction in the headline indices, around 10% from record highs hit on Sept. 27, analysts do believe the valuations are not cheap and there is room for more correction. The Nifty 50 may correct to around 22500 points, Jathin Kaithavalappil, assistant vice-president of research at Choice Broking, said.

Automobile stocks will remain in focus as the Federation Of Automobile Dealers Associations will release 42-day festive period data on Thursday. Data released by the Society of Indian Automobile Manufacturers showed a near 13% on-year rise in both domestic production and sales in Apr-Oct, and an over 15% rise in exports. The overall vehicle sales volume was on the back of a robust growth in two-wheeler despatches.

The 10-year US Treasury yield closed at 4.43% Tuesday, up 13 basis points from the previous close and at 1739 IST, the yield was marginally down at 4.42%. If the yield rises more, around 4.5% level, the US Federal Reserve may intervene, Ambrish Agarwal, director at Eastern Financiers, said. Factoring in the rise in yield, the odds of another 25 bps cut in the US at the next meeting have fallen to 62.1%, compared to 70% a week ago. Meanwhile, the probability of the rates remaining steady went up to 37.9% from 29.5% a week ago. Investors await the CPI data for October from the US for cues on how the Federal Reserve may decide to go about interest rates at its December meeting.  

"(US President-elect Donald) Trump's plan to implement up to 60% tariffs on China and tariffs across all key exporters to the US could lead to supply chain disruption and drive inflation higher for the US and globe," Saral Seth, vice-president of institutional equities at IndSec Securities and Finance, said. Weaker exports to the US could lead to currency depreciation for emerging economies like India.

Back home, Grasim Industries is expected to report a rise in its top line and bottom line for the September quarter, but losses from its new businesses, including paints and the construction material e-commerce venture, are likely to weigh on its overall margins, analysts said. Hero MotoCorp is expected to report robust growth in key earnings metrics on the back of a 7% year-on-year rise in wholesale volumes led by higher sales of premium motorcycles and exports.  End

Edited by Vandana Hingorani

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