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Informist, Tuesday, Jan. 7, 2025

By Anshul Choudhary

MUMBAI – The benchmark indices saw muted gains Tuesday after a sharp decline of 1.6% Monday with investors buying some beaten-down stocks. Buying in index heavyweights such as Reliance Industries, some banks, and life insurance companies helped the indices recover partially from Monday's slump.

Analysts described Tuesday's movement as a mere "pull-back" after the sharp losses Monday. Analysts continue to be cautious due to outflows by foreign investors and concerns that the current earnings slowdown may last for some more time.

While most of the sectoral indices ended in the green, concerns around earnings growth meant the gains were muted. The Nifty 50, which was up 0.8% at one point, lost half of the gains and closed at 23707.90 points, up 0.4%. The BSE Sensex closed 0.3% higher at 78199.11 points.

There were several stock-specific reactions, with shares of Reliance Industries up 1.9% after it fell nearly 3% Monday. Among other heavyweights, ICICI Bank and Larsen & Toubro rose over 1% each. However, a decline in information technology and some autombile stocks limited the gains in the overall market.

Shares of SBI Life Insurance rose 3% and HDFC Life Insurance rose 2.3% to close at INR 1,477.75 and INR 619.85, respectively. Centrum Broking initiated coverage on both stocks with a 'buy' rating and a target price of INR 1,930 for SBI Life and INR 780 for HDFC Life. The brokerage said current macro factors are favourable for insurance companies considering a rise in household savings, per capita income, and working age population. It expects unit-linked insurance plans to continue to find buyers due to a thriving equity market.

Shares of Oil and Natural Gas Corp. were the top gainers on the Nifty 50 index and ended 3.6% higher at INR 263.49--the stock's highest closing level in two months. The stock rose after media reports said CLSA upgraded the stock to 'high conviction outperform' and set the target price at INR 360. The brokerage expects several positive triggers for the business, including higher output of oil and gas and better realisations. Further, it pointed out that the stock is trading at a substantial discount to peers.

Within large-caps, shares of information technology companies fell owing to high valuations. IT companies will be among the early ones to report their Oct-Dec earnings with Tata Consultancy Services set to report its results Thursday. The December quarter is largely expected to be weak for the IT sector due to seasonal factors such as furloughs, but analysts are positive that the demand environment is improving gradually.

Shares of HCL Technologies fell 1.9%, those of Tata Consultancy Services fell 1.6%, and those of Tech Mahindra fell nearly 1%. Owing to this, the Nifty IT was the only sectoral index in the red, falling 0.7%. The sectoral index was down for the third straight session, falling 2.2% in this period.

The broader market indices outperformed the benchmarks with the Nifty Midcap 150 up 0.9% and Nifty Smallcap 250 up 1.4%. Fertiliser companies were some of the major gainers amid expectations of strong earnings in the December quarter, driven by import replacement. Shares of Rashtriya Chemicals & Fertilizers rose 7.6%, those of Madras Fertilizers rose 6%, and those of Fertilizers and Chemicals Travancore gained over 5%.

Among other stocks, shares of Biocon ended nearly 7% higher after the Pharmaceuticals and Medical Devices Agency of Japan approved the Ustekinumab BS subcutaneous injection made by Biocon's subsidiary. Shares of BSE rose nearly 6%.

Shares of Zomato lost nearly 5% after media reports said brokerage Jefferies downgraded its rating on the stock to 'hold' from 'buy'. Jefferies also cut the target price of Zomato by 18% to INR 275. The stock could experience consolidation in 2025 after its shares more than doubled in value in 2024. Further, the broking firm expects an impact on the company's profitability due to increasing competition in the quick commerce space.

The fall in shares of Zomato had a negative effect on Info Edge, which holds over 12% stake in Zomato. Shares of Info Edge fell over 4%. Sentiment around the stock was also negative after its billings in the December quarter were lower than the market's expectations, a research analyst with a domestic brokerage said. The company's billings in the quarter rose nearly 16% on year to INR 6.68 billion.

* Of the Nifty 50 stocks, 34 rose and 16 fell

* Of the Sensex stocks, 22 rose and 8 fell

* On the NSE, 2,076 stocks rose, 751 fell, and 72 were unchanged

* On the BSE, 2,624 stocks rose, 1,355 fell, and 107 were unchanged

* Nifty PSU Bank: down 4%; Nifty Energy: down 3%; Nifty Realty: down 3%

BSE                                               NSE

Sensex: 78199.11, up 234.12 points or 0.3%        Nifty 50: 23707.90, up 91.85 points or 0.4%

End

Edited by Rajeev Pai

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