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Informist, Monday, Dec. 16, 2024

By Anjana Therese Antony

MUMBAI – The domestic equity market, which saw sharp gains Friday, fell marginally Monday, primarily due to losses in information technology and telecom stocks. There was some caution ahead of the outcome of the US Federal Reserve's policy meeting, due in the early hours of Thursday, which likely led traders to sell shares of Indian IT companies which have major exposure to the US. The Fed's policy decision will provide major cues to the market which has been moving in a tight range for most sessions in the last couple of weeks. 

The lesser-than-normal investment activity of foreign institutional investors has been weighing the market down, analysts said. "We (domestic market) don't have enough triggers that can attract major (foreign) inflows. Even though the market corrected sharply recently, valuations are still expensive," a senior research analyst at a domestic brokerage said, adding that major inflows are not expected unless the market sees more correction. 

"Looking at today's (Monday's) fall, I think FIIs were (net) sellers," the senior research analyst said. Foreign investors had turned net buyers Friday after being sellers in the previous two sessions. So far in December, they have net bought shares worth $2.8 billion after net selling over $13 billion worth of equities during October and November. 

On Monday, losses in IT peers led to an over 0.1% fall in the Nifty 50, which closed 0.4% lower at 24668.25 points. The BSE Sensex ended 0.5% lower at 81748.57 points. The support for the 50-stock index is seen at 24600-24500 points for the near term and resistance at 24720-24790 points. The volatility index, India VIX, surged and closed 7.4% higher, hinting at near-term nervousness in the market. The fear gauge had closed down in the last six consecutive sessions.

Meanwhile, data released Monday showed that India's WPI inflation eased to 1.89% in November from a four-month high of 2.36% in October. This was also lower than the average of estimates of 2.1% polled by Informist. Following the WPI data, benchmark indices came off lows. "We expect the WPI inflation to remain largely benign over the next couple of averaging 2.3% in Q3FY25 (Oct-Dec). For FY25, the WPI inflation is projected to average around 2.5%," Rajani Sinha, chief economist at CareEdge Ratings, said in a note. The ease in WPI inflation follows a similar movement in India's CPI data, which cooled to 5.48% last month from a 14-month high in October. 

Among IT stocks, Infosys, Tech Mahindra, and Tata Consultancy Services fell the most in the Nifty 50 and closed around 1% lower each. Investors are widely anticipating a 25-basis-point reduction in federal fund rates to 4.25-4.50%. The Nifty IT was among the worst-hit sectoral indices and closed 0.7% lower, with seven of 10 constituents in the red. Benign US inflation data and tighter labour market data are raising hopes of a further cut in interest rates. The Fed had started its rate cutting cycle in September with a 50-bps reduction and then with a 25-bps trim in November. However, Fed Chairperson Jerome Powell's recent comments that the apex bank is not in a hurry to cut rates had dented sentiment, which has eased since then due to favourable economic data.

Among other laggards were telecom companies such as Bharti Airtel and Reliance Industries, which snapped gains from the previous session. Bharti Airtel took a breather from its three-day winning run and closed 1.1% lower at INR 1,662.55 on the National Stock Exchange Monday. Last week, Jefferies had said the stock is among its top picks for 2025.   

Banks and financial services also took a breather after the recent gains. The Nifty Bank started the week on a negative note after gaining in the last four weeks. Nomura Institutional Equities said that banks remain vulnerable to margin pressures due to continued shortage and a decrease in current account savings account. ICICI Bank, State Bank of India, and HDFC Bank along with a few public sector banks appear better placed to face deposit challenges, the broking firm said in its report. 

On the other hand, defensive stocks such as pharmaceuticals and healthcare were the top gainers Monday. Among the big gainers were Aurobindo Pharma and Dr. Reddy's Laboratories, which closed 3% and 2% higher, respectively. Aurobindo Pharma snapped a five-day losing streak after the company said a committee of the European Medicines Agency recommended the grant of marketing authorisation for its wholly-owned subsidiary CuraTeQ Biologics's Zefylti.

Among specific stocks, Oberoi Realty closed 6.4% higher at INR 2,253.50, and became the top gainer on the Nifty 200 after Axis Securities initiated coverage on the stock with a 'buy' rating and set a target price of INR 2,560. The recommendation was supported by its dominant position in Mumbai Metropolitan Region, robust annuity scale up, entry into new key markets, and low leverage with strong cash flows, the broking firm said in its report. 

* Of the Nifty 50 stocks, 15 rose and 35 fell

* Of the Sensex stocks, 6 rose and 24 fell

* On the NSE, 1,525 stocks rose, 1,320 fell, and 59 were unchanged

* On the BSE, 2,346 stocks rose, 1,796 fell, and 98 were unchanged

* Nifty Metal: down 1%; Nifty IT: down 0.74%; Nifty Pharma: up 0.44%

BSE                                               NSE

Sensex: 81748.57, down 348.55 points or 0.47%     Nifty 50: 24668.25, down 100.05 points or 0.4%        

End

Edited by Tanima Banerjee

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