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Informist, Monday, Dec. 9, 2024

By Anjana Therese Antony

MUMBAI – The benchmark indices are seen choppy Tuesday, similar to the trend on Monday, technical and derivatives analysts at different broking firms said. "The near-term sentiment, which had turned slightly bullish recently, has reversed as worries about likely slowdown in recovery of demand in major sectors may push bears to bet on the market," a research analyst at a domestic broking firm said. Expensive valuation of Indian equities and sharper-than-expected slowdown of the domestic economy may continue to add to investors' woes and higher food inflation, experts said.

The Indian stock market Monday closed slightly lower after being choppy during the day. Shares of fast-moving consumer goods and automobile companies were the biggest loser due to expectations of slower improvement in demand trends and sales volume in these sectors. The Nifty 50 closed 0.2% lower at 24619.00 points and the BSE Sensex ended down 0.3% at 81508.46 points. The near-term support for the 50-stock index is pegged at 24590-24560 points and resistance at 24700-24800 points, a technical and derivatives analyst at a domestic broking firm said.

The domestic market fell over the last two months as foreign institutional investors sold shares heavily, but the quantum of sales eased towards the end of November. However, experts said they do not expect major inflows during Oct-Mar as stock valuations are expensive and that FIIs might wait for them to come to reasonable levels. 

Shares of most automobile and fast-moving consumer goods companies are likely to fall more in the next session due to a weak outlook on demand in these sectors. Nifty Auto and Nifty FMCG were among the worst sectoral laggards on Monday.

Experts believe that a pickup in the government's capital expenditure would help in the revival of some sectors, including cement, construction, and defence. "The current quarter till now has not been great in terms of demand and Oct-Nov was muted. However, the industry is hoping that the scenario will improve," said Jyoti Gupta, senior analyst at Nirmal Bang Institutional Equities, adding that Jan-Mar is typically a volume-led quarter. Gupta also said that the construction-related companies she tracks are saying that the actual traction in demand will only start from April, though they are currently getting some projects.

When it comes to the banking space, though the recent reduction in cash reserve ratio has created some room for upside in these stocks, analysts said valuations of most players remain expensive, except for some players in the private sector. The Nifty Bank index closed lower for the second consecutive session. The index ended down 0.2%. It had risen in the last three consecutive weeks, gaining 6.6% during that period.

The political unrest in Bangladesh is likely to keep focus on textile-related stocks in India due to the anticipation of some shift in demand to the domestic market. Shares of Trident and Vardhman Textiles were among the top sector performers, closing higher by 10.2% and 4.3%, respectively. 

Among specific stocks, Bharat Electronics may rise Tuesday as the company has got orders worth INR 6.34 billion. SpiceJet will be in focus as the Delhi bench of the National Company Law Tribunal will hear a petition by its lessor Aviator ML 29641 to start insolvency proceedings against the airline. The stock closed 1.4% lower at INR 60.51 on the BSE.  End

Edited by Ashish Shirke

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