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Informist, Monday, Nov. 25, 2024

By Anjana Therese Antony

MUMBAI – The landslide victory of the Bharatiya Janata Party-led Mahayuti alliance in the Maharashtra Assembly elections was the primary trigger that led to sharp gains in the domestic market, which otherwise saw losses for almost two months. Analysts said the alliance's win was key as the state has the second-highest number of seats in both the Houses of Parliament, which ensures policy continuity and introduction of new reforms. There was also some short covering by foreign investors in index futures ahead of the MSCI rejig effective after Indian market hours Monday, analysts said.

"The victory (in Maharashtra) somewhat eased concerns about the recent slowdown in government projects and capital expenditure, supporting infrastructure-related and state-owned stocks," a research analyst at a city-based broking firm said. In the Maharashtra Assembly election, the votes for which were counted on Saturday, the National Democratic Alliance, led by the BJP, won 235 of the 288 seats, with the BJP alone winning 132 seats.

The domestic market--which fell for almost two months on recurring foreign outflows, disappointing earnings growth, geopolitical tension between Russia-Ukraine and Israel-Iran, and expensive valuation, among others--extended gains for the second consecutive session. The Nifty 50 and BSE Sensex ended 1.3% higher each Monday at 24221.90 points and 80109.85 points, respectively. The near-term support for the 50-stock index is pegged at 24100-24000 points and resistance at 24400-24500 points, according to a technical and derivatives analyst. Emkay Global Financial Services, in its strategy report, said it has reduced the Nifty 50 target by 4% to 25000 points from 26000 points, despite a three-month rollover to the December series. 

"While we expect government capex spend to gain momentum, we expect it to underachieve the Budgeted target of INR 11.1 trillion by 8-10%," Elara Capital said in its report Monday. The rising trend of welfare politics doesn't bode well for the state's fiscal consolidation path and shall likely challenge the pace of capital expenditure as resources have to be diverted for freebies, the report said. 

Banks and financial services stocks were the top gainers Monday and together contributed to 0.6% rise in the Nifty 50 index. The Nifty PSU Bank index closed 4.2% higher, with all the constituents in the green. 

Central Bank of India ended 8.4% higher at INR 56.71 after the bank got approval from the Reserve Bank of India to foray into the insurance business. This would be done through a joint venture with the Generali group under Future Generali India Insurance Co. and Future Generali India Life Insurance Co. 

The Maharashtra Assembly election result also pushed shares of public sector companies as well as capital goods players sharply higher. Bharat Electronics was the third top gainer in the Nifty 50 index and closed 4.1% higher at INR 292.35. Cummins India, Siemens, and Bharat Dynamics were among the top capital goods gainers in the Nifty 200 and closed over 6.2-7.3% higher. State-owned oil stocks also surged. Oil and Natural Gas Corp. closed 5% higher and Bharat Petroleum Corp. ended 3.7% higher. The surge comes after recurring selling by foreign investors in the sector.

"After the recent correction, we believe the market is in the oversold zone. The number of stocks trading above 200 day-moving average in the NSE 500 universe is hovering around 38% and the long-term average is 55%," Axis Securities said in its strategy report. This was around 85-90% two months back, indicating that the market was in overbought territory, the broking firm said. 

The broader indices also mirrored the rise in the overall market. The Nifty Midcap and Nifty Smallcap indices closed 1.5-2.0% higher amid the broad-based buying Monday. However, some analysts said there are "bubbles" in the broader market as valuations remain expensive for some stocks while the fundamentals of the companies are not strong enough. 

When it comes to the Adani group, shares of some companies under the conglomerate rose, while others declined. Adani Enterprises and Adani Ports and Special Economic Zone closed 1.3% and 2.6% higher, respectively, both up for the second consecutive session. On other hand, Adani Energy Solutions and Adani Green Energy ended in the red. Reports had said that Kenyan President William Ruto called for immediate cessation of the government's partnership with Adani group for the facelift of an airport in Nairobi and building transmission infrastructure in that country under the public-private partnership.

Following this, Adani Energy Monday said it did not made any disclosure on the same as the order was in the "ordinary course of business of the company and its subsidiaries". The listing regulations only require disclosure of new orders received or awarded, amendment or termination of already received orders 'other than in the ordinary course of business', the company informed exchanges. The group's stocks had plunged last week after their Chairman Gautam Adani and other senior officials were charged in the US for bribing government officials in India for solar power projects. Investors had lost more then INR 2 trillion Thursday following the news. 

Among specific stocks, JSW Steel closed 2.5% lower and Zomato gained 3.5% after BSE announced that the food delivery company will replace the steel-maker on the BSE Sensex, effective Dec. 23. 

* Of the Nifty 50 stocks, 41 rose and 9 fell

* Of the Sensex stocks, 24 rose and 6 fell

* On the NSE, 1,950 stocks rose, 874 fell, and 81 were unchanged

* On the BSE, 2,699 stocks rose, 1,350 fell, and 165 were unchanged

* Nifty PSU Bank: up 4.2%; Nifty Oil & Gas: up 2.8%; Nifty Realty: up 2.2%

BSE                                               NSE

Sensex: 80109.85, up 992.74 points or 1.3%        Nifty 50: 24221.90, up 314.65 points or 1.3%

End

US$1 = INR 84.28

Edited by Akul Nishant Akhoury

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