More Stories

Informist, Monday, Nov. 18, 2024

By Alina Geogy

MUMBAI – The Nifty 50 extended losses for the seventh consecutive session Monday as losses in information technology stocks offset gains in metal and select banking stocks. Investors sold IT stocks after US Federal Reserve Chair Jerome Powell hinted at a likely slowing of interest rate cuts in the US, but they bought metal stocks after China said it would end a tax rebate policy on several export products, which is seen as a positive for Indian metal companies.

Shares of IT giants, such as Wipro, Infosys, and Tata Consultancy Services, ended 2-3% lower and weighed on the Nifty 50. Losses in these stocks dragged the Nifty IT down over 2%, making it the worst hit among the sectoral indices. The stocks fell after Powell Thursday said policymakers in the US are in "no hurry" to cut rates. "The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully," he said. The Fed had cut rates by 50 basis points in September, followed by a 25 bps rate cut last week. Interest rate traders see a 65% chance that the Fed will cut key rates by 25 basis points at its December meeting, according to the CME FedWatch tool.

Losses in IT stocks had taken the benchmark indices down as much as 0.8% earlier in the day. However, gains in metal and some banking stocks helped the indices gradually come off the lows and even attempt a short-lived recovery. Around noon, the Nifty 50 managed to rise around 210 points from its intraday low, but the index failed to hold on to these gains and ended at 23453.80 points, down 78.90 points or 0.3%. The BSE Sensex ended at 77339.01 points, down 241.30 or 0.3%. 

Shares of metal companies rose after China said it would end a tax rebate policy on various products and commodities, including aluminium, starting Dec. 1. Shares of aluminium companies Hindalco Industries and National Aluminium Co. ended up nearly 4% and over 9%, respectively. Tata Steel and JSW Steel ended up 2.3% and 1.2%, respectively. Gains in these stocks helped the Nifty Metal rise nearly 2%, making it the best performer among sectoral indices.

Indian metal players are expected to benefit from China's move, a research analyst covering the metal sector at a large domestic brokerage said. "Export tax rebate was an incentive to export, now this going away will lead to lower exports, which would lead to lower production," the analyst said. "With demand remaining the same, the prices of aluminium will go up." The move could drive countries reliant on Chinese aluminium to seek alternatives amid limited global production capacity, Dow Jones newswires quoted analysts at global financial services company ING as saying.

Shares of city gas distributors ended sharply lower following rating downgrades by some brokerages after GAIL (India) cut the allocation of domestic gas to these companies by 18-20%. The government had already reduced the allocation of gas under the administrative price mechanism to these companies by 18-20% last month. Shares of Indraprastha Gas, Mahanagar Gas, and Gujarat Gas ended down nearly 20%, 14%, and 7%, respectively. These sudden notifications will not only raise operational challenges for city gas distributors in terms of arranging appropriate sources to compensate for the shortfall, but the long-term implications pose a threat to the earnings before interest, taxes, depreciation, and amortisation per standard cubic metre of these companies, Prabhudas Lilladher said. 

Shares of Muthoot Finance rose nearly 8% and were the top gainer on the Nifty 200 index. On Thursday, the company reported an all-time-high net profit of INR 12.51 billion for the September quarter, up 26.3% on year, driven by a significant rise in loan assets under management. It also raised its gold loan growth guidance to over 25% in 2024-25 (Apr-Mar) from 15% earlier. Global broking firm Morgan Stanley upgraded the stock's rating to 'equalweight' from 'underweight' and raised the target price by 12%, according to an ET Now report.

Shares of Hero MotoCorp closed up nearly 3% and became the second top gainer in the Nifty 50 after the company Thursday reported slightly better-than-expected earnings for the September quarter. Nirmal Bang Institutional Equities was positive about the company's strong margin performance, its plans to increase market share, and the green shoots of recovery in rural demand.

Shares of Honasa Consumer hit a 20% lower circuit after the company reported a consolidated net loss for the September quarter compared to a net profit a year ago. Emkay Global Financial Services downgraded the stock's rating to 'sell' from 'buy' and cut its target price. Limited offline presence and slower growth in the company's core brand Mamaearth leaves it exposed to competitors, where long-term recovery looks difficult, the brokerage said.

The broader market was also down, with the three Nifty small-cap indices closing around 0.6% lower each. The market breadth leaned in favour of the bears, as nearly 60% of all stocks traded on the exchanges ended lower. In fact, nearly 190 stocks hit a 52-week low and nearly 160 struck the lower circuit. Among sectoral indices, Nifty IT and Nifty Oil & Gas were the worst hit, while Nifty Metal and Nifty FMCG were the best performers.

* Of the Nifty 50 stocks, 21 rose and 29 fell

* Of the Sensex stocks, 13 rose and 17 fell

* On the NSE, 1,100 stocks rose, 1,732 fell, and 92 were unchanged

* On the BSE, 1,611 stocks rose, 2,486 fell, and 127 were unchanged

* Nifty IT: down 2.3%; Nifty Oil & Gas: down 1.6%; Nifty Metal: up 1.9%

BSE                                               NSE

Sensex: 77339.01, down 241.30 points or 0.31%     Nifty 50: 23453.80, down 78.90 points or 0.34%

End

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.