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Informist, Thursday, Dec. 26, 2024

By Anjana Therese Antony

MUMBAI – Indian stock market may move in a tight range till the beginning of the December quarter earnings season, which will start before mid-January, said analysts. "The market is expected to consolidate in the absence of major triggers...how the earnings season spans out is something we need to see to identify the likely movement of the market next month," a senior research analyst at a domestic broking firm said. The analyst is of the view that the trend in earnings growth may be somewhat similar to the previous quarter, if not slightly better. However, he expects a better growth in the financial performance of companies in the coming quarters as the demand environment is likely to pick up and a major boost from the government's capital expenditure cycle is anticipated to boost many sectors, including defence, engineering and construction, among other sectors.

The market has seen major corrections since October, primarily due to sharp outflows by foreign investors. Investors pulled money out of the market due to various reasons, including poor earnings growth, expectations of major changes in the US under Donald Trump's regime from January, likely slowdown in interest rate cuts by major global central banks, depreciation of the rupee, expensive valuations of Indian equities, and so on.

"We think Indian equities should be relatively insulated from the macro headwinds of a stronger dollar...and likely higher US tariffs on China, which are our baseline expectations for 2025," Goldman Sachs in its equity research report said. While India's strong long-term structural growth story remains intact, growth has been cyclically slowing and impacting profits, which led the broking firm to downgrade its view on the country's equities a month ago, it said. 

Analysts also expect the earnings growth of companies in India to pick up pace as the Reserve Bank of India starts its policy easing cycle and on higher government spending. In its macroeconomic outlook report, Standard Chartered said it has an 'overweight' view on large-cap stocks and is 'neutral' on mid-caps and small-caps. Indian equities look to end 2024 with positive returns for the ninth consecutive year, marking it the longest streak on record, Standard Chartered said. 

On Thursday, the Nifty 50 closed 0.1% or nearly 23 points higher at 23750.20 points, while the BSE Sensex ended less than 1 point lower at 78472.48 points. Both the indices have fallen around 9% each from their record highs hit on Sept. 27. Also, they declined around 2% each so far in December. The near-term resistance for the 50-stock index is pegged at 23800-24000 points and support at 23600-23550 points. 

The year saw major volatile sessions; from the interim Budget in February to the US Federal Reserve's monetary policy announcement in December. While the first half of the year saw a strong performance on robust earnings, the second half saw volatility due to earnings slowdown and higher-than-normal domestic interest rates and slower economic growth. 

Among specific stocks, Mazagon Dock Shipbuilders might be in focus as Friday is the record date for the sub-division of one share of the company into two. The stock closed 2.2% higher at INR 4,729.75 on the National Stock Exchange. On the global front, investors await a series of data, including the US unemployment insurance weekly claims report due Thursday and Japan's December CPI (Tokyo) due Friday.  End

Edited by Akul Nishant Akhoury

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