More Stories

Informist, Friday, Nov. 22, 2024

By Anjana Therese Antony

MUMBAI – Heavy buying Friday in Adani group stocks and banking and financial services players, which were the worst hit in Thursday's session on concerns about their exposure to companies under businessman Gautam Adani, helped the benchmark indices close the week in the green. The indices marked their biggest intra-day rise in five months and also registered their biggest weekly gain in eight weeks.

"The recovery in Adani stocks hints at easing sentiment about the indictment against its chairman... there could be optimism that the strong fundamentals of these companies could shrug off the impact of such allegations, like what happened after the Hindenburg (Research) claims last year," a research head at a domestic broking firm said.

Some analysts said the market had almost reached the bottom, but weak macroeconomic factors--such as rupee depreciation, the bearish approach of foreign investors, rising geopolitical tension in West Asia and the consequent surge in crude oil prices, and expensive valuations--could still lead to corrections in the short term.

The Nifty 50 ended 2.4% higher at 23907.25 points and the BSE Sensex closed 2.5% higher at 79117.11 points. The near-term support for the 50-stock index is pegged at 23850-23760 points and resistance at 24250-24380 points. Bajaj Auto was the sole Nifty 50 stock to close lower, down 0.3%.

Shares of banking and financial services companies ended higher and led gains Friday as there was some easing of worries related to their exposure to Adani group companies. "Their macros are improving, such as the narrowing gap between credits and deposits, improving net interest margins, and comfortable valuations in some pockets," an analyst tracking banks at a domestic broking firm said. The Nifty PSU Bank, which was the worst hit sectoral index in the previous session, was among the top sectoral gainers, closing 3% higher at 6508.15 points. Gains in banking and financial services stocks contributed to a rise of nearly 0.5% in the Nifty 50.

State Bank of India recovered the losses made in the previous session and closed 4.5% higher at INR 816.05 after Jefferies reportedly retained its 'buy' rating on the stock, with a target price of INR 1,030. This target price indicates a 26% upside for the stock from the current level. Jefferies said SBI's asset quality is holding up and recoveries will also aid earnings in Oct-Mar. It said the higher share of marginal cost of funds will aid the bank's margins and the stock remains among its top picks in the sector.

The brokerage's views come a day after the stock plunged, given its exposure to Adani group companies. The bribery case against Gautam Adani and some senior officials of the Adani conglomerate raised concerns about banks and financial services companies which had given loans to the group. The US Justice Department has issued arrest warrants for Adani and his nephew Sagar Adani over an alleged multi-billion-dollar bribery and fraud scheme involving the group's solar projects in India.

Shares of the conglomerate's flagship companies, Adani Enterprises and Adani Ports and Special Economic Zone, which had nosedived Thursday, closed around 2% higher each Friday. Their market capitalisation rose by more than INR 99 billion. On Thursday, their market capitalisation had fallen by INR 1.11 trillion. Along with the group's eight other listed companies, they had lost a cumulative INR 2.2 trillion in market capitalisation. Among the gainers Friday were Adani Total Gas, Ambuja Cements, ACC, and New Delhi Television, which closed 1-3% higher.

However, shares of four companies of the group continued their southward journey. These were Adani Green Energy, Adani Energy Solutions, Adani Power, and Adani Wilmar, which closed 1-8% lower. Together, they lost INR 270 billion in market capitalisation Friday.

Among the major gainers in the overall market were information technology stocks, which surged after data showed unemployment claims in the US rose less than expected in the week ended Thursday. Though this could mean slower interest rate cuts in the US, the unemployment claims data also hint at continued strength in the US economy, which could drive demand for IT-related projects. This bodes well for Indian IT companies, whose major share of revenue comes from the US, an analyst tracking the sector said.

Shares of Tata Consultancy Services and Infosys were the top IT gainers in the Nifty 50, up around 4% each, and contributed to a nearly 0.3% rise in the 50-stock index. The Nifty IT was the top sectoral gainer, closing 3.3% higher at 43332.10 points, with all ten constituents in the green.

Among specific stocks, index heavyweight Reliance Industries closed 3.5% higher at INR 1,265.40 after foreign broking firms remained positive on the company. Morgan Stanley maintained its 'overweight' rating on the stock, with a target price of INR 1,662, which hints at 31% upside for the stock from the current level. The brokerage reportedly said the company's refining margin is starting to recover after two quarters.

SJVN closed 4% higher at INR 107.57 after the company said it signed a memorandum of understanding with the Rajasthan government to develop renewable energy projects in the state. Zinka Logistics Solutions closed 4.7% lower at INR 260.05 after listing on the exchanges at INR 280.90. 

* Of the Nifty 50 stocks, 49 rose and 1 fell

* All 30 constituents of Sensex rose

* On the NSE, 1,917 stocks rose, 877 fell, and 74 were unchanged

* On the BSE, 2,446 stocks rose, 1,475 fell, and 120 were unchanged

* Nifty IT: up 3.3%; Nifty PSU Bank: up 3%; Nifty Media: down 0.3%

BSE                                               NSE

Sensex: 79117.11, up 1961.32 points or 2.5%       Nifty 50: 23907.25, up 557.35 points or 2.4%

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.