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Informist, Monday, Nov. 25, 2024

By Anjana Therese Antony

MUMBAI – While the Bharatiya Janata Party-led Mahayuti alliance's sweep in the Maharashtra Assembly election may continue to boost sentiment Tuesday, analysts do not see sharp gains in the near term, even as the medium-term outlook remains positive. The market saw losses for almost two months due to recurring selling by foreign investors, rupee depreciation, falling chances of further rate cuts in the US in the near term, expensive domestic valuations, and disappointing earnings growth. Analysts believe that these factors may continue to weigh on sentiment in the near term, while higher capital expenditure by the government and better demand trends could make things better in the medium term. 

The MSCI rejig will be effective after UK business hours and will be closely watched. "Indian equities are expected to witness a net inflow of around $2.5 billion in FII passive flows as the quarterly rejig in the MSCI indices is slated to occur today (Monday)," said Ameya Ranadive, senior technical analyst at StoxBox, in a post-market note. Shares of HDFC Bank will be in focus as its weightage on the index is expected to increase. Nuvama Institutional Equities said this would potentially lead to an inflow of about $1.9 billion after the inclusion of the bank. 

On Monday, 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. The victory of the BJP-led alliance in the state election as well as short covering by foreign investors in index futures helped the market see sharp gains, analysts said. 

The fall in the fear gauge, India VIX, also hinted that the near-term nervousness in the market has eased slightly. The volatility index closed nearly 5% lower at 15.3025, but remained above 15 for the fifth straight session. 

Shares of Adani group companies will continue to be under investors' radar in the coming sessions, especially amid the ongoing bribery case in the US against the group Chairman Gautam Adani and some of the senior officials. TotalEnergies, which holds a 19.75% stake in Adani Green Energy, said it will not make any new investments in the Adani group of companies until accusations against the Adani group individuals and their consequences have been clarified. In a filing to the stock exchanges after market hours Monday, TotalEnergies also said it was not made aware of the bribery investigation against the management and learnt about the indictment through public announcements. 

Additionally, Florida-based GQG Partners, a major investor in the Adani group of companies, said Monday it was surprised the US government funded and partnered with the Indian conglomerate to develop a port in Sri Lanka while some of the group's officials were under investigation for allegedly bribing, or promising to pay bribes to, Indian officials for power supply deals. GQG Partners also said any negative action by the Indian government against the group could have serious implications. "As the facts stand today, we believe these companies will keep operating even if individuals receive fines or sanctions," GQG Partners said in the memo.

Shares of Hindustan Unilever may also be under focus as the company's board approved the demerger of its ice cream business into an independent listed company. The stock closed 1.1% higher at INR 2,471.45 on the National Stock Exchange Monday. GE Vernova T&D India after Indian market hours said its promoter Grid Equipments will sell up to 8.4% stake in the company through offer for sale at a floor price of INR 1,550 apiece. 

Investors will also closely look the meeting outcome of the Union Cabinet Monday in New Delhi. Informist, attributing sources, reported Monday that the Cabinet is likely to approve around INR 25 billion for promoting natural farming in the country. It may also approve railway projects in Maharashtra, Informist reported.  End

US$1 = INR 84.28

Edited by Akul Nishant Akhoury

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