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Informist, Thursday, Jan. 2, 2025

MUMBAI – The slight optimism that the December quarter earnings would be "somewhat" better than the previous few quarters, coupled with robust automobile sales data for December posted by many companies, pushed bulls to invest more in the market Thursday. This optimism made traders cover their short positions in the Nifty 50 options chain ahead of the weekly expiry of the index Thursday, further boosting the sentiment, derivatives analysts said. Though a significant improvement in earnings growth is not seen for Oct-Dec, analysts are optimistic that the scenario will improve in the coming quarters, with major support expected from the government's capital expenditure, interest rate cuts in the US and India, and better demand.

While many are increasingly betting on the government's spending, there is another section of analysts who believe it may not gain traction soon. As of now, no major traction is seen in the government's spending trends, analysts said. Overall, capital expenditure has remained subdued, with recovery seeming unlikely in the current fiscal year, Elara Securities said in its report. While recent policy adjustments, such as the removal of the cap on capital spending, may boost spending momentum, overall capital expenditure is still expected to fall short of the target by INR 750 billion, the broking firm said. 

On Thursday, the Nifty 50 surpassed the psychologically important level of 24000 points after nearly two weeks. The 50-stock index closed 1.9% higher at 24188.65 points and the Sensex ended 1.8% higher at 79943.71 points, respectively. The near-term support for Nifty 50 is pegged at 24100-24000 points and resistance at 24300-24400 points, derivatives analysts said. 

The equities market saw the sharpest intra-day rise of nearly 2% since Sept. 19. Only two constituents of the Nifty 50 closed lower, Britannia Industries and Sun Pharmaceutical Industries. More than half of the stocks listed on the National Stock Exchange and the BSE closed higher.

The fall in the fear gauge, India VIX, also hinted that the near-term nervousness in the market is easing. The volatility index closed 5.3% lower at 13.7375 on Thursday. The market managed to retain its optimism for the second day of the new year after witnessing a sharp correction in the last two months. The market gave only half the returns in 2024 compared to a year ago, with benchmark indices rising nearly 9% during the year, lower than the 20% growth in 2023. The indices also fell over 7% from their record highs hit on Sept. 27. 

The rise in automobile, financial services, and information technology companies together pushed the Nifty 50 nearly 1.2% higher Thursday. These three sectors together have a 56% weightage in the Nifty 50, with financial services constituting the majority of 34.6%. 

Robust monthly sales data boosted the sentiment towards auto stocks Thursday, pushing the Nifty Auto index to end as the top sectoral gainer, up 3.8%. Morgan Stanley said passenger vehicle sales trends have improved and Maruti Suzuki India's sales figures came as a positive surprise. The stock rose for the second straight day after its sales grew 30% on year. Similar was the case with Ashok Leyland and Mahindra & Mahindra. Most constituents of the auto index closed higher, with Eicher Motors gaining the most and hitting a record high of INR 5,330 on the National Stock Exchange. The company's total motorcycle sales in December rose 25% on year, and exports saw a whopping 90% growth. 

Similar was the case with some of the banks, which posted growth in their deposits and advances as of Dec. 31. Shares of Kotak Mahindra Bank closed nearly 3% higher at INR 1,837.15 after foreign broking firm Citi raised the rating on the stock to 'buy' from 'neutral'. It also increased the target price to INR 2,070 from INR 1,940. The bank's sustained loan growth momentum and improved delinquency trends are expected to gather pace, reports said, attributing Citi. The brokerage also said the lifting of the regulatory restrictions imposed by the Reserve Bank of India will be key to the stock's robust performance.

Citi also maintained its 'buy' rating on Bajaj Finance, with a target price of INR 8,150. It expects loan growth stability, supported by a positive bias of 3-5 basis points in net interest margins. Following this, the stock hit a one-month high, and so did the stock of its parent company, Bajaj Finserv. Both stocks closed around 7% higher each. 

Among other top performers were IT stocks, with Infosys gaining the most and pushing the Nifty 50 higher by 0.2%. The stock closed 4% higher at INR 1,957.85 after reports said CLSA anticipates the company to guide for 4.25-4.50% revenue growth for the current financial year. The company had guided for a 3.75-4.5% growth in its sales during the September quarter results. This also raised hopes that IT companies will showcase better performance in the coming quarters, though Oct-Dec may not see significant improvement. The Nifty IT was the second-biggest sectoral gainer and closed 2.3% higher, with all 10 constituents in the green. 

Among specific stocks, PB Fintech hit a record high of INR 2,230 after the management said the near-term growth outlook for the company was very strong. In an interview with ET Now, Chief Executive Officer Yashish Dahiya said he expected the company to grow 30% over the next five years. The company also maintained its stance of 30% growth in its core business. 

On the other hand, Petronet LNG ended 5.7% lower at INR 327.75 after the Petroleum and Natural Gas Regulatory Board criticised the company for tariff hikes for re-gasification. The regulator said the company, through its Dahej unit, was able to profit immensely by increasing re-gas charges, even as its capacity increased. 

* Of the Nifty 50 stocks, 48 rose and 2 fell

* Of the Sensex stocks, 29 rose and 1 fell

* On the NSE, 1,824 stocks rose, 997 fell, and 90 were unchanged

* On the BSE, 2,395 stocks rose, 1,574 fell, and 117 were unchanged

* Nifty Auto: up 3.8%; Nifty IT: up 2.3%; Nifty Media: down 5.3%

BSE                                               NSE

Sensex: 79943.71, up 1436.30 points or 1.83%      Nifty 50: 24188.65, up 445.75 points or 1.88%

End

Edited by Tanima Banerjee

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