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Informist, Tuesday, Nov. 26, 2024

By Anjana Therese Antony

MUMBAI – As near-term cues in the domestic market remain weak, analysts expect traders to have a negative bias towards equities in the coming sessions, too. However, the quantum of fall is unlikely to be sharp and periodic bounce-backs are likely as equities are oversold now, analysts said. 

"Trump's tariff imposition on countries including China can trigger trade wars and there could be near-term impacts on India as well, but not in the long term," a research analyst at a domestic bank-sponsored broking firm said. The US President-elect Donald Trump said that he would impose a 25% tariff on all products from Canada and Mexico, and an additional 10% tariff on goods from China once he becomes the president.  

On Tuesday, the Nifty 50 and the BSE Sensex ended 0.1% lower each at 24194.50 points and 80004.06 points, respectively. The benchmark indices have fallen more than 5% each since the beginning of October. 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. 

The market has been dragged down for almost two months due to the bearish approach of foreign investors, depreciation of the rupee, lower chances of a further rate cut in the US in the near term, the slowdown in domestic corporate earnings growth, and aggravated geopolitical tension between Ukraine-Russia and Israel-Iran.

Foreign investors have been increasingly turning bearish on the domestic market, particularly since the end of September. They net sold equities worth $11 billion in October and $2.51 billion till Friday in November. October saw the highest-ever monthly FII outflows in India. FIIs also increased their short positions in index futures to 63% on Monday from 35% in early September, hinting at a bearish approach towards the stock market. However, FIIs were net buyers on Monday.

On banking stocks, Capital Economics believes there are enough near-term headwinds that could make investors cautious about the sector, though low valuation could be a medium-term tailwind. "We doubt a major rebound is likely in the near term. A key reason is that banks are now facing a cyclical headwind from deterioration in asset quality," it said in its research report. 

Further updates on the indictment of Adani group Chairman Gautam Adani and other senior group officials will be closely watched by investors in the coming days. Shares of companies under the conglomerate closed lower, losing a total market capitalisation of more than INR 446 billion on Tuesday. Global rating agency Moody's Ratings changed the outlook on seven Adani group companies, including Adani Ports and Special Economic Zone, to negative from stable, while affirming their ratings. 

Among specific stocks, Angel One may remain under the focus as the company's subsidiary, Angel One Asset Management Co., got a licence from the Securities and Exchange Board of India to commence the mutual fund business. The stock closed nearly 4% higher at INR 2,909.20 on the National Stock Exchange. End

Edited by Saji George Titus

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