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Informist, Thursday, Jan. 9, 2025

By Alina Geogy

MUMBAI – Benchmark indices ended down for the second consecutive session Thursday due to caution ahead of the beginning of the corporate earnings season – the first results of the season will be announced by Tata Consultancy Services later in the day. Investors are increasingly worried that several companies could report weaker-than-expected earnings for the December quarter due to lower demand, a rise in prices of raw materials, and lower-than-expected spending by the government. The cautious tone in the market is likely to persist until further cues from the quarterly earnings and management commentary, analysts said.

After a weak opening, the Nifty 50 extended its decline and fell as much as 0.8% or around 185 points to an intraday low of 23503.05 points. The 50-stock index found strong support at 23500 points, analysts said. The benchmarks Nifty 50 and Sensex ended the session 0.7% lower each at 23526.50 points and 77620.21 points, respectively.

The fear gauge of the market, India VIX, rose over 2% to an intraday high of 14.8850 during the session, but settled slightly off highs at 14.6575. The India VIX snapped a two-day decline Thursday, thereby indicating some worries amongst market participants.

A fall in shares of banks and information technology firms contributed most to the decline of the benchmark indices. Shares of Tata Consultancy Services, HDFC Bank, Reliance Industries, and Larsen & Toubro weighed the most on the indices. On the other hand, shares of most fast-moving consumer goods companies saw buying and this helped limit the fall of the indices.

Shares of information technology major TCS closed 1.7% lower at INR 4,038.85. After the market closed, TCS reported a consolidated net profit of INR 123.80 billion for the December quarter, slightly higher than the average of analysts' expectation of INR 122.74 billion. The software company's bottom line grew 4% from a quarter ago, despite a marginal decline in revenue sequentially.

Shares of most banks ended lower for the second day in a row. Sentiment towards the sector has taken a hit ever since some banks reported disappointing business updates for the December quarter, with credit growth being lower than market expectations. Shares of HDFC Bank ended 1.6% lower Thursday and are on course to end lower for the second consecutive week. The heavyweight stock contributed the most to the fall in the Nifty 50.

Shares of several fast-moving consumer goods companies rose and helped the Nifty FMCG index to become the sole sectoral index to end in the green. Shares of Marico gained 4.5%, while those of Hindustan Unilver, Britannia Industries, and Nestle India rose over 1% each. Investors likely bought shares of fast-moving consumer goods companies on hopes of an improvement in the overall consumption trend two quarters down the line, according to some analysts.

Among other stocks, shares of Bajaj Auto closed 2.2% higher and were the top gainer on the Nifty 50 index. Foreign brokerage firm CLSA upgraded Bajaj Auto's rating to 'overweight' from 'underweight' with a target price of INR 9,493, according to an ET Now report. The brokerage is bullish on the stock after its recent steep correction and improving two-wheeler franchise, as per the report.

Shares of Lupin rose almost 2% during the day after the company received an establishment inspection report with a 'voluntary action indicated' tag from the US Food and Drug Administration for its Pithampur unit-1 facility in Madhya Pradesh. The tag means that the concerned facility can voluntarily correct its deficiencies even though some objectionable conditions were found by the regulator during the inspection. However, the stock failed to sustain these gains and ended nearly flat.

Shares of Indraprastha Gas gained 3% after the government raised the allocation of domestic gas to the company by 31%, thus increasing the share of domestic gas in the compressed natural gas segment to 51% from 37%. The revised allocation will be effective from Jan. 16. Analysts are of the view that the higher gas volume is expected to aid the company's profitability. This announcement was welcomed by investors, particularly after the domestic gas allocated to the company was reduced by 20% in November.

Shares of chemical firms such as SRF and Navin Fluorine International rose after news reports said gas distributors in the US announced a price hike for refrigerant gases. Refrigerant manufacturer IGas USA said the supply of refrigerants R32 and R125 was affected and that prices would be tripled. Shares of SRF and Navin Fluorine closed up 13.7% and 9.5%, respectively. With this, both stocks ended with gains for the third straight session.

The broader market indices closed in the red, with the Nifty small-cap indices falling over 1% and being the worst-hit. Only one-fourth of all stocks traded on the National Stock Exchange ended higher Thursday.

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

* Of the Sensex stocks, 10 rose and 20 fell

* On the NSE, 766 stocks rose, 2,037 fell, and 90 were unchanged

* On the BSE, 1,211 stocks rose, 2,750 fell, and 106 were unchanged

* Nifty Realty: down 2.7%; Nifty Energy: down 2.0%; Nifty FMCG: up 0.9%

BSE                                               NSE

Sensex: 77620.21, down 528.28 points or 0.7%      Nifty 50: 23526.50, down 162.45 points or 0.7%

End

Edited by Saji George Titus

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