More Stories

Informist, Monday, Dec. 30, 2024

By Anjana Therese Antony

MUMBAI – The near-term outlook on the Indian stock market is expected to be bearish on expensive valuations and continuing foreign investor outflows, analysts said. "There are no near-term triggers in favour of the bulls. We need to see how the government capex (capital expenditure) and corporate earnings turn out," a senior analyst at a domestic broking firm said. The analyst said earnings growth in the December quarter is not expected to show much improvement from the previous few quarters, but the outlook is bullish about Jan-Mar and thereafter.

The Indian stock market has fallen 10% since October. Foreign portfolio investors net sold shares worth INR 221.52 billion in the last nine sessions. So far in 2024, FPIs net purchased shares worth only $1.03 billion, which is just 4% of the $24.07 billion worth of equities they bought in 2023.

On Monday, the Nifty 50 ended 0.7% lower at 23644.90 points and the BSE Sensex closed 0.6% down at 78248.13 points. The near-term support for the Nifty 50 is pegged at 23590-23500 points and resistance at 23700-23800 points. The rise in the fear gauge, India VIX, which closed nearly 6% higher at 13.9725, also hinted at some near-term nervousness in the market.

The quarterly rejig of Nifty indices will be effective Tuesday. Nuvama Alternative & Quantitative Research expects outflows from HDFC Bank, State Bank of India, and Kotak Mahindra Bank, whose weightage in the Nifty Bank index will be reduced.

For Indian information technology companies, analysts are turning slightly bullish on likely better earnings and favourable policies under US president-elect Donald Trump, who will take charge on Jan. 20. Trump has signalled that he supports the H-1B visa programme, which would allow US companies, including IT firms, to employ foreign nationals. A major portion of employees of blue-chip companies such as Infosys and Tata Consultancy Services are in the US under this visa. Earlier, there were concerns that Trump could impose stringent restrictions on immigration policies, including H-1B visas.

Coming to the automobile sector, some analysts expect softer sales volume for December. Auto companies are scheduled to release their monthly sales volume data Wednesday. "2W (two-wheeler) wholesale volumes would have grown only minutely y/y (year-on-year) in Dec '24, as demand takes a breather after a strong festival showing. Ahead, positive rural markets and pent-up demand would keep momentum healthy," Anand Rathi Share and Stock Brokers said in its preview report. The broking firm also expects good sales volumes, with two-wheeler and tractor manufacturers outrunning the others.

The likely pick-up in the government's capital expenditure is turning the focus to sectors such as defence, construction, cement, and engineering. "On the back of strong government backing and increasing private-sector participation, the Indian defence sector is set to grow at a CAGR (compounded annual growth rate) of around 20% during FY24-FY29," Care Ratings said in a report. Indian defence-sector companies are set to further enhance the country's defence capabilities, reduce import dependency, and elevate its global stature, the rating agency said. 

Among specific stocks, Mazagon Dock Shipbuilders may rise as the company landed an order worth INR 19.90 bln from the defence ministry. The stock closed 2.1% lower at INR 2,269.05 on the National Stock Exchange. Rail Vikas Nigam may also be in focus as the company became the lowest bidder for a project worth INR 1.37 billion from Central Railway. IDBI Bank will be in focus Tuesday as its board meets to discuss raising funds.

End

US$1 = INR 85.53

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.