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Informist, Friday, Dec. 27, 2024

By Anjana Therese Antony

MUMBAI – Though the Indian equity market managed to rise in the first half of Friday, it erased most gains and closed slightly higher amid expensive valuations, depreciation in the rupee, and lack of fresh triggers. "There is still some worry as FIIs approach has not turned bullish towards our market...Our returns were lower and earnings growth was disappointing," said a research analyst – institutional desk at a domestic broking firm. FIIs may wait till macroeconomic factors turns in favour of them, the analyst said. Analysts have been raising concerns about extended valuations, coupled with the recurring depreciation in the rupee. The rupee fell to a record low of 85.80 a dollar during the day.

On Friday, Nifty 50 and Sensex closed 0.3% higher each at 23813.40 points and 78699.07 points, respectively. On levels front, 23500-23200 will act as strong support zone for Nifty 50 and resistance is placed around 23950-24050 levels on the higher side, said Vipin Kumar, a senior technical and derivatives analyst at Globe Capital Market. The fall in the fear gauge, India VIX, hinted that the near-term nervousness in the market was easing. The volatility index closed 5.7% lower at 13.2375. 

December saw the slowest rise in the market this year compared with other months. Benchmark indices rose less than 10% on year in December, while the market rose more than 20% on year each in other 11 months. In 2023, the market had risen 20% on year in December, which was one of the only two months during the year when benchmark indices saw the highest pace of growth. 

Both the benchmark indices have gained around 10% each so far this year, which is half their upside in 2023. This is also lower than the rise in US indices Dow Jones Industrial Average and S&P 500 during the same time period, which rose 15% and 27%, respectively. Expensive valuations have been weighing on the market this year after investors made extraordinary gains a year ago. 

The chatter that the government may cut tax for individuals on income up to INR 1.5 million in the upcoming Union Budget also boosted the sentiment. Reuters, citing two government sources, said that the government may do so to provide relief to the middle class and boost consumption as the economy slows. The report also said the quantum of the cut has not been decided and that the final decision would be made closer to Feb. 1. 

The depreciation in the rupee pushed export-oriented sectors like pharma, automobile, and information technology higher. The fall in the rupee helps companies to provide their products or services at a lower price to the importing country. As a result, the cheaper cost of the product could lead to more demand for such products and thus, more exports. The rise in auto stocks contributed to over 0.1% in the Nifty 50. Among major gainers in the sector were Tata Motors, Eicher Motors, and Mahindra & Mahindra, which closed 1.4-2.5% higher. The six auto stocks in the Nifty 50 have 7.44% weightage in the index. The Nifty Auto index closed 1% higher at 23099.05 points, with most constituents in the green. The index closed higher for the third straight session after moving in the red for five sessions. 

Among other major gainers were pharmaceutical and healthcare stocks. Shares of Dr. Reddys Laboratories were the top gainer on the Nifty 50 and closed 2.5% higher at INR 1,389.45. The Nifty Pharma was the top sectoral gainer and closed 1.3% higher at 23008.35 points.
 

Among specific stocks, IndusInd Bank closed 2.3% higher at INR 953.40 after the bank said it has invited bids for INR 15.73 billion worth of non-performing retail microfinance loans, as pressures in the microfinance industry continued to increase. These assets would be sold to interested parties through a public auction, the bank said. SKF India snapped a 10-day losing run and closed 3% higher at INR 4,576.50 after the company said it will demerge its industrial operations into SKF India (Industrial). 

On other hand, Coal India ended 1.6% lower at INR 380.50. A senior official told Informist that the company may miss its production target of 838 million tonnes for the ongoing financial year by 3.0-3.5%. This would be due to poor demand and congestion from pithead coal stocks piling up at its mines, the company official said.

On new listings, all five stocks that debuted on Friday closed higher. Shares of Mamata Machinery ended a whopping 159% higher at INR 630 compared with the issue price of INR 243. DAM Capital Advisors ended 47% higher at INR 415.10, Transrail Lighting was up 28% at INR 553.55, Sanathan Textiles up 21% at 388.35, and Concorn Enviro Systems closed 18% up at INR 827.10. 

* Of the Nifty 50 stocks, 29 rose and 21 fell

* Of the Sensex stocks, 19 rose and 11 fell

* On the NSE, 1,431 stocks rose, 1,391 fell, and 72 were unchanged

* On the BSE, 1,948 stocks rose, 2,026 fell, and 114 were unchanged

* Nifty Pharma: up 1.3%; Nifty Auto: up 1%; Nifty Metal: down 1%

BSE                                               NSE

Sensex: 78699.07, up 226.59 points or 0.29%       Nifty 50: 23813.40, up 63.20 points or 0.27%

End

US$1 = INR 85.53

Edited by Akul Nishant Akhoury

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