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Informist, Wednesday, Nov. 27, 2024

By Anjana Therese Antony

MUMBAI – The Indian equity market may see another session of muted movements on Thursday in the absence of major triggers in domestic and global markets, analysts at two broking firms said. They also said the short-term cues remain weak, including expensive valuations, foreign outflows, geopolitical tensions and depreciation of the rupee. However, the medium-to-long-term outlook on the domestic market remains bullish, backed by the pickup in the government's capital expenditure cycle, likely interest rate cuts by major central banks, recovery in rural demand, and foreign inflows, they said. 

The Nifty 50 and BSE Sensex ended 0.3% higher each at 24274.90 points and 80234.08 points, respectively. Both indices have fallen around 7% each from their record high hit on Sept. 27. The near-term support for the 50-stock index is pegged at 24100-24000 points and resistance at 24350-24400 points, technical and derivatives analysts said. 

Developments related to the recent indictment against the Adani group management will be closely watched by investors in the coming days. Adani group company stocks surged on Wednesday after Adani Green Energy said Chairman Gautam Adani and some other officials have not been charged with violations of the US Foreign Corrupt Practices Act. Adani Enterprises and Adani Ports and Special Economic Zone closed 11.5% and 6.3% higher, respectively. Adani Green and Adani Energy Solutions hit upper circuits of 10% each, while Adani Total Gas and Adani Power ended nearly 20% higher each and Adani Wilmar closed over 8% higher. The group of companies together gained over INR 1 trillion in market capitalisation Wednesday after losing double this value on Nov. 21 following the indictment. 

ICRA on Wednesday cut its forecast on cement volume growth in 2024-25 (Apr-Mar) to 4-5% from 7-8%. However, the rating agency said it was optimistic that sustained and healthy demand for urban housing will support the pick-up in cement volumes from the housing segment. Analysts said while the near-term fundamentals remain weak for the cement sector, they are bullish about the medium-term outlook. The demand trends are expected to improve, particularly on more infrastructure-related projects by the government. Slower-than-expected construction activities, muted demand, poor earnings, and pricing pressure have been dragging shares of cement manufacturers recently. 

A pickup in the government's capital expenditure is also expected to push defence stocks higher in the medium term, analysts said. This, coupled with strong order books and the recent sharp corrections are likely to give more headroom for the upside, they added. 

On information technology companies, Nuvama Institutional Equities said it expects the improving macroeconomic dynamics in the US to revive discretionary spending, which will bode well for domestic companies like Wipro. It upgraded Wipro's rating to 'buy' from 'hold' and raised the target price to INR 700 from INR 520 earlier. Indian IT companies, like their US counterparts, had felt the heat of the sharp cuts in discretionary spending, higher interest rates in the US, and weak demand. However, analysts and other market experts believe the situation to improve in 2025-26 (Apr-Mar). 

On the global front, investors await the US unemployment insurance weekly claims report for the week ended Nov. 23 on Wednesday. The US financial markets are closed on Thursday for Thanksgiving Day.  End

Edited by Saji George Titus

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