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Informist, Wednesday, Dec. 11, 2024

By Anjana Therese Antony

MUMBAI – Caution prevailed in the domestic market Wednesday ahead of the US inflation data later in the day, which could give cues about the interest rate decision of the US Federal Reserve at its policy meeting next week. On multiple occasions, the Fed has said that it is not in a hurry to reduce interest rates further, but the market thinks otherwise. "It is quite possible that investors were restraining themselves from betting aggressively ahead of the data. Major shocks are not seen, but I think some caution was exercised," a research analyst at a domestic broking firm said.

According to a poll of economists by The Wall Street Journal, US CPI is expected to have accelerated to 2.7% in November from 2.6% in October, while the core annual CPI is forecast at an unchanged pace of 3.3%.

The benchmark indices moved in a tight range for the fourth session and closed slightly in the green. The Nifty 50 closed 31.75 points or 0.1% higher at 24641.80 points and the BSE Sensex closed just 16 points higher at 81526.14 points. The near-term support for the 50-stock index is pegged at 24500-24480 points and resistance at 24680–24730 points, according to two technical and derivatives analysts. The fall of the fear gauge, India VIX, also indicates that the nervousness in the market has eased a bit. The volatility index ended nearly 4% lower at 13.2675, down for the fourth consecutive session.

Information technology stocks were the top gainers of the session on hopes of an interest rate cut in the US next week. According to the CME FedWatch Tool, there is an 86.1% chance of a 25-basis-point cut in interest rates to 4.25-4.50%. The Nifty IT closed 0.3% higher, with six out of 10 constituents in the green. IT companies in India have a high exposure to the US, with around 60% of their revenue being earned from the world's largest economy. A likely rate cut in the US, coupled with favourable policies from the new president-elect Donald Trump, are expected to drive shares of IT companies in the coming months, analysts said. However, expensive valuations may cap the upside, they added.

On the other hand, shares of banks were the biggest sectoral laggards. Analysts believe the reduction in cash reserve ratio will improve liquidity in the banking system and boost the financial performance of banks and financial services companies. However, there are only a few pockets in the banking space, such as private banks, where valuations are at reasonable levels, banking analysts and a fund manager said. Axis Bank and State Bank of India, which closed around 0.5% lower each, were among the biggest laggards in the Nifty 50. The Nifty Bank index ended 0.4% lower at 53391.35 points.

Among financial services companies, Bajaj Finance was the second-biggest gainer in the Nifty 50 after the company unveiled its strategy for 2025-2029. The company targets a total credit market share of 3.00-3.25% by 2027-28 (Apr-Mar) from 2.1% as of September, and 3.2-3.5% by FY29, ICICI Securities said in its research report. It also plans to become the lowest cost provider to 200 million customer franchise by FY29. The broking firm has retained its 'buy' rating on the stock, with a target price of INR 8,500. The stock closed 2.6% higher at INR 7,115.10 on the National Stock Exchange.

Railway-related stocks saw a pre-Budget rally and were also up on expectations of a pickup in the government's capital expenditure. Rail Vikas Nigam and Indian Railway Finance Corp., which closed higher by 3.4% and 5.1% respectively, were among the top performers in the sector. 

Among other stocks, PNC Infratech closed 12.4% higher at a one-month high of INR 347.90 after its subsidiary became eligible for a bonus worth INR 44.28 million for finishing a highway project two months ahead of schedule. An analyst at a domestic broking firm said the valuation of the stock is very cheap compared to its industry peers and that there could be an upside of 20-30% within the next year.

Avenue Supermarts ended 2.9% lower after Goldman Sachs retained its 'sell' rating on the stock and cut its target price to INR 3,425 from INR 4,000 earlier. The company's competitive moat is facing increasing pressure, and it does not address large sections of India's grocery market, Goldman Sachs was quoted as saying by news reports.

* Of the Nifty 50 stocks, 26 rose, 23 fell, and 1 was unchanged 

* Of the Sensex stocks, 13 rose and 17 fell

* On the NSE, 1,501 stocks rose, 1,305 fell, and 73 were unchanged

* On the BSE, 2,145 stocks rose, 1,840 fell, and 110 were unchanged

* Nifty FMCG: up 0.4%; Nifty IT: up 0.3%; Nifty PSU Bank: down 0.9%

BSE                                               NSE

Sensex: 81526.14, up 16.09 points or 0.02%        Nifty 50: 24641.80, up 31.75 points or 0.13%        

End

Edited by Ashish Shirke

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