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Informist, Thursday, Nov. 28, 2024

By Anjana Therese Antony

MUMBAI – The fall in banks, financial services, and information technology companies Thursday pushed the overall Indian equity market into sharp losses. The fresh missile attacks on Ukraine by Russia during the day also weighed on investors' sentiment, deepening worries about geopolitical tensions aggravating further. "This (the sharp fall) was not expected. It is likely that the market may continue to fall more in the short term as things are not favourable for the bulls," a research analyst at a domestic bank-sponsored broking firm said. 

The rise in US personal consumption expenditure price inflation, a preferred inflation gauge by the US Federal Reserve, also added to the woes, raising worries that the Fed may delay the next interest rate cut. The inflation metric rose to 2.3% in October from 2.1% in September. The Fed Chairperson Jerome Powell had recently said that the central bank was not in a hurry to reduce rates.

The market capitalisation of stocks on the Nifty 50 fell by INR 2.87 trillion on Thursday with the Nifty 50 and the BSE closing 1.5% lower each at 23914.15 points and 79043.74 points, respectively. The near-term support for the Nifty 50 is pegged at 23800-23750 points and resistance at 24000-24100 points, according to a senior technical and derivatives analyst at a domestic broking firm. Traders aggressively added short positions Thursday ahead of the monthly expiry of futures and options contracts, the analyst said.

Only four constituents of the Nifty 50 closed higher on Thursday. The domestic market has been falling for almost two months, particularly due to continuous foreign outflows to the US and China, expensive valuations, expectations of a slowdown in interest rate cuts by major global central banks, the slowdown in domestic corporate earnings growth and depreciation of the rupee. However, FIIs turned net buyers in the domestic market for the first time on Monday since Sept. 26.

Media reports, quoting Ukraine's Energy Minister German Galushchenko, said Russia attacked the country's power infrastructure, leading to "emergency power cuts". The conflict aggravated recently, raising concerns that Russian President Vladimir Putin could opt for the nuclear option, particularly after he revised the nuclear doctrine last week. The rise in tension has caused concerns about crude oil supply as Russia is the world's fourth-largest oil exporter. Union Minister for Petroleum and Natural Gas Hardeep Singh Puri recently said Russia is the largest crude oil supplier to India, accounting for more than 35% of the country's oil imports. At 1742 IST, the Brent Crude futures contract traded on the Intercontinental Exchange was up 0.8% at $73.38 per barrel.
 

Banks and financial services stocks were the major laggards Thursday, together contributing to nearly 0.4% of the fall in the Nifty 50. While valuations of some banks remain at comfortable levels, an analyst tracking the sector said near-term headwinds may continue to drag these stocks lower.

Shares of insurance companies fell after CNBC TV-18 reported that the Insurance Regulatory and Development Authority of India urged insurance companies to reduce the share of their business originating from banks to below 50% of their total sales. The report also said the regulator plans to monitor this situation over the next few months. Shares of SBI Life Insurance Co. were the worst hit on the Nifty 50 and closed 5.1% lower at INR 1,428.60. The other insurance company on the 50-stock index, HDFC Life Insurance Co. closed 3.4% lower. 

IT stocks saw a sharp fall on Thursday on worries about a likely delay in further rate cuts in the US. Tata Consultancy Services, Tech Mahindra, HCL Technologies, and Infosys were the worst-hit IT stocks on the Nifty 50 and closed 2.0-3.5% lower. The fall in these stocks contributed to nearly 0.4% decline in the Nifty 50 index. The Nifty IT fell the most among sectoral indices and closed 2.4% lower at 42968.75 points, with all its constituents in the red. 

Shares of some companies of the Adani group continued to surge for the second straight session after the conglomerate said its chairman and some other senior officials were not charged for violations of the US Foreign Corrupt Practices Act, unlike what media reports had said. Adani Green Energy and Adani Energy Solutions hit 10% upper circuits at INR 1,087.20 and INR 726.85, respectively. Adani Enterprises, among the few stocks on the Nifty 50 to close higher, ended 1.6% higher at INR 2,437.10. On the other hand, Adani Ports and Special Economic Zone closed 2.7% lower and Adani Wilmar was down 0.4%. 

* Of the Nifty 50 stocks, 4 rose and 46 fell

* Of the Sensex stocks, 1 rose and 29 fell

* On the NSE, 1,537 stocks rose, 1,245 fell, and 88 were unchanged

* On the BSE, 2,207 stocks rose, 1,733 fell, and 109 were unchanged

* Nifty IT: down 2.4%; Nifty Auto: down 1.6%; Nifty PSU Bank: up 0.9%

BSE                                               NSE

Sensex: 79043.74, down 1190.34 points or 1.5%     Nifty 50: 23914.15, down 360.75 points or 1.5%

End

Edited by Saji George Titus

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