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Informist, Wednesday, Dec. 4, 2024

By Anjana Therese Antony

MUMBAI – The benchmark stock indices closed a choppy Wednesday slightly higher, with banking and financial services companies leading the upside. The expectation that the Reserve Bank of India may adopt measures to boost liquidity in the banking system after its policy meeting outcome Friday drove the rise in financial stocks for the second consecutive session. Analysts anticipate that the central bank will cut the cash reserve ratio by 50 basis points from the current 4.5%. While most analysts expect the RBI to retain the repo rate at 6.50% for the 11th consecutive time, some others anticipate a cut of 25 bps.

Shares of HDFC Bank were the second-highest gainer in the Nifty 50 and closed nearly 2% higher at INR 1,860.10 on the National Stock Exchange. All indices relating to the financial space ended the day higher, with Nifty Private Bank, Nifty Bank, Nifty Financial Services, and Nifty PSU Bank up 0.9-2.3%. 

Gains in the financial pack helped the Nifty 50, which was choppy in the latter part of the trading session, close slightly in the green. The index closed barely 10 points higher at 24467.45 points. The BSE Sensex ended 0.1% higher at 80956.33 points. Near-term support for the 50-stock index is seen at 24420-24380 points and resistance at 24530-24600 points, a technical and derivatives analyst at a domestic broking firm said.

Indices rose for the fourth consecutive session Wednesday after falling for almost two months till November. While the gradual rise in the market can be attributed to hopes of a pick-up in the government's capital expenditure, a likely boost to liquidity by the RBI, better corporate earnings growth in Oct-Dec, and easing valuations, analysts said the returns from the stock market could be comparatively lower next year, compared to the last couple of years. Equity investors should lower their expectations of the equity markets considering that the current valuations are still high and provide limited opportunity for expansion in price-to-earnings, Harsha Upadhyaya, chief investment officer of equity at Kotak Mutual Fund, said while detailing the outlook for 2025 in Mumbai. 

Automobile stocks tumbled Wednesday. The sector was one of the worst-hit. Bajaj Auto fell the most among auto stocks in the Nifty 50, closing 1.8% lower at INR 8,999.15. The stock, which was up in early trade, fell to its lowest level in over four months at INR 8,951 after reports, quoting UBS, said the company had reduced the price of its entry-level motorcycle Freedom 125 by INR 5,000 and that of a mid-level variant by INR 10,000. The foreign broking firm retained its 'sell' rating on the stock, with a target price of INR 7,900, which indicates a further 12% fall. Many other automobile companies mirrored the fall in Bajaj Auto, with Tata Motors, Maruti Suzuki India, and Hero MotoCorp all closing lower by 1.3-1.6%.

Some insurance stocks surged amid the expectation that the government may reduce the goods and services tax on insurance premiums. HDFC Life Insurance Co. was the top gainer in the Nifty 50, closing 2.6% higher at INR 650.25. The recently-listed Niva Bupa Health Insurance Co. hit its 20% upper band at INR 98.31. The stock has risen nearly 26% since its debut on the bourses at INR 78.14 on Nov. 14. SBI Life Insurance Co. closed 0.8% higher after rising 2% intraday. 

The government's Defence Acquisition Council's nod Tuesday for five capital acquisition proposals worth a total INR 218 billion pushed defence stocks higher. Among the top gainers in the sector were Mazagon Dock Shipbuilders, Garden Reach Shipbuilders & Engineers, and Bharat Dynamics, which closed higher by 3.7-5.5%.

Among specific stocks, Honasa Consumer closed 3.4% higher after reports said co-founder and Chief Executive Officer Varun Alagh increased his stake in the company to 31.93% from 31.88% for INR 45 million.

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

* Of the Sensex stocks, 15 rose and 15 fell

* On the NSE, 1,699 stocks rose, 1,103 fell, and 75 were unchanged

* On the BSE, 2,384 stocks rose, 1,582 fell, and 104 were unchanged

* Nifty PSU Bank: up 2.3%; Nifty Financial Services: up 1.1%; Nifty FMCG: down 0.7%

BSE                                               NSE

Sensex: 80956.33, up 110.58 points or 0.14%       Nifty 50: 24467.45, up 10.30 points or 0.04%

End

Edited by Rajeev Pai

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