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Informist, Tuesday, Nov. 26, 2024

By Anjana Therese Antony

MUMBAI – The Indian stock market failed to retain the uptrend it saw Monday and closed slightly lower as the near-term cues remained weak. "The correction (since October) was needed for an overbought market like ours. While the medium-to-long term prospects are good, much gains are not expected for a couple of months," a research analyst at a domestic broking firm said. While information technology stocks gained the most in a weak market, shares of automobile companies were the laggards.

Equities in India have been falling since early October due to continuous selling by foreign investors, weak earnings growth, rupee depreciation, unsettled geopolitical tension in Russia and Ukraine, and Iran and Israel, among other reasons. Experts continue to believe that investors may not get as much return as they got in the last couple of years. 

The Nifty 50 and BSE Sensex closed 0.1% lower each at 24194.50 points and 80004.06 points, respectively. The near-term support for the 50-stock index is pegged at 24000-23980 points and resistance at 24300-24400 points, according to a senior technical and derivatives analyst at a domestic broking firm said. Both indices have fallen more than 5% each since Oct. 1. 

"Investors exercised caution and trimmed their equity exposure ahead of the monthly expiry on Thursday. There is still a lot of apprehension among the investors as FII outflows have continued for almost two months now," said Prashanth Tapse, senior vice president of research at Mehta Equities, in a post-market note. Foreign investors, who have been net sellers in the domestic market since Sept. 26, turned net buyers Monday and purchased equities worth INR 99.48 billion. 

Amid the indictment against the Adani Group chairman and some senior officials, shares of the companies under the conglomerate saw selling pressure today. The fall comes after foreign rating agencies, including Fitch Ratings and Moody's Ratings, gave bearish outlook on some group companies' long-term ratings. Adani Enterprises and Adani Ports and Special Economic Zone closed 4.7% and 3.3% lower, respectively, and together lost INR 205.48 billion in market capitalisation Tuesday. 

Shares of other companies under the group--such as Adani Power, Adani Wilmar, Adani Total Energy, Adani Energy Solutions, and Adani Green Energy--closed lower by 2-7%. They lost INR 207.43 billion in market capitalisation.

Fitch placed the "BBB-" rating of Adani Ports and Special Economic Zone Ltd. and Adani Energy Solutions Ltd.'s long-term ratings on 'rating watch negative'. Moody's changed its outlook on subsidiaries of Adani Green and Adani Ports to negative from stable. The rating agency also said it may downgrade the ratings of the group entities if legal proceedings lead to a material disruption to their operations or access to capital.

On other hand, the Nifty Midcap and Nifty Smallcap indices outperformed the benchmark indices. Nifty Smallcap indices ended close to 1% higher, while Nifty Midcap indices ended slightly higher. "...there are clearer warning signs in the small- and-mid-cap sections of the market, and these could weaken further," Capital Economics said in its report. Valuations of both small- and mid-caps are now above their crash in 2018, which arguably reflected the deflating of a bubble, it said. 

On the sectoral front, many defence stocks rose after JP Morgan reportedly initiated coverage on some companies in the sector, such as Bharat Electronics, Hindustan Aeronautics, and Mazagon Dock Shipbuilders. These stocks closed 1.4-1.9% higher. Mazagon Dock hit an over one-month high of INR 4,445.65 on the National Stock Exchange and closed at INR 4,234.15. 

Information technology stocks gained the most Tuesday. The Nifty IT index ended higher for the fifth straight session and was the top sectoral gainer. Investors turned their focus to IT stocks a couple of months ago on expectation of rate cuts in the US and on anticipation of improvement in demand trends. Wipro and Infosys were the top IT gainers in the Nifty 50 and closed 1.1% and 1.8% higher, respectively. 

Auto stocks were the major laggards in the market Tuesday. A similar fall was seen in automobile stocks in European markets after US President-elect Donald Trump's tariff threat triggered concerns about trade wars. Trump said he would impose a 25% tariff on all products from Canada and Mexico, and an additional 10% tariff on goods from China once he takes over the White House. Bajaj Auto was the top laggard among auto stocks in the Nifty 50 and closed 3% lower and Mahindra and Mahindra ended nearly 2% lower. The Nifty Auto was the worst sectoral performer and closed 1.3% lower. 

Coming to specific stocks, Vodafone Idea surged after reports said the Union Cabinet gave in-principal approval for the waiver of bank guarantees for telecom operators. However, the company said it has not received any communication from the Department of Telecommunications about any decision on the waiver of the bank guarantees for the spectrum acquired by the company before 2022. The stock closed nearly 8% higher at INR 7.52. 

* Of the Nifty 50 stocks, 22 rose and 28 fell

* Of the Sensex stocks, 13 rose and 16 fell, and 1 was unchanged

* On the NSE, 1,635 stocks rose, 1,165 fell, and 80 were unchanged

* On the BSE, 2,277 stocks rose, 1,644 fell, and 110 were unchanged

* Nifty Auto: down 1.3%; Nifty Pharma: down 1%; Nifty IT: up 1.1%

BSE                                               NSE

Sensex: 80004.06, down 105.79 points or 0.13%     Nifty 50: 24194.50, down 27.40 points or 0.11%

End

Edited by Akul Nishant Akhoury

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