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Informist, Thursday, Nov. 28, 2024

By Anjana Therese Antony

MUMBAI – The benchmark indices are likely to fall further Friday, though the fall may be smaller than seen Thursday, analysts said. "I am not really bullish on our market for the near term, but things will definitely get better in the next six to eight months on strong pick-up in government capex (capital expenditure), fall in interest rates, improvement in demand, and better earnings," an equity strategist at a bank-sponsored broking firm said.

On Thursday, both the Nifty 50 and the BSE Sensex ended 1.5% lower 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. The rise in the fear gauge, India VIX, also hinted at near-term nervousness in the market. The volatility index closed 4% higher at 15.2050.

The recent correction and consequent moderation in valuations provide an opportunity to add select stocks, Motilal Oswal Financial Services said in its strategy report. Both benchmark indices have fallen more than 8% from their record highs hit on Sept. 27. "The correction has cooled off the valuations in large-caps, even as mid-/small-caps trade at expensive multiples," the broking firm said.

Insurance stocks may remain in focus after some companies said they are not aware of any regulatory discussions about the insurance business being channelled through bancassurance arrangements. The comments came in response to queries raised by the stock exchanges after reports said the Insurance Regulatory and Development Authority of India had urged insurance companies to reduce the share of their business originating from banks to below 50% of total sales. Shares of SBI Life Insurance Co. and HDFC Life Insurance Co. ended lower by 5% and 3.4%, respectively.

For information technology companies, while the unfavourable inflation data hit sentiment towards these stocks Thursday, analysts do not expect the weakness to continue in the short term. "Some of their valuations are decent and discretionary spending by US clients may improve in the next few quarters," an IT analyst at a domestic broking firm said. IT companies have major exposure to the US, with around 60% of their revenue coming from the world's largest economy. On Thursday, Nifty IT was the top sectoral laggard and closed 2.4% lower. Shares of Infosys and HCL Technologies were the worst-hit IT stocks on the Nifty 50. 

Investors will continue to track developments relating to the indictment of Adani group Chairman Gautam Adani and seven other senior officials. Shares of some companies of the group surged for the second consecutive day after the conglomerate said the top management was not charged with violations of the US Foreign Corrupt Practices Act. The group companies had together lost INR 2.2 trillion in market capitalisation on Nov. 21 after reports said the chairman had been charged in the US with bribery.

Investors will also monitor developments relating to the continuing war between Ukraine and Russia.  End

Edited by Rajeev Pai

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