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Informist, Thursday, Jan. 9, 2025

By Alina Geogy

MUMBAI – Indian equities are likely to fall for the third straight session Friday owing to concerns regarding quarterly earnings performance, recent outflows by overseas investors, and the depreciation of the rupee, analysts said. With information technology giant Tata Consultancy Services having kicked off the earnings season, investors will now turn to quarterly earnings and management commentary for more cues for the market Friday.

After the market closed, TCS reported a consolidated net profit of INR 123.80 billion for the December quarter, slightly higher than the average analysts' estimate of INR 122.74 billion. While TCS' bottom line in Oct-Dec grew 4% sequentially, slightly higher than analysts' estimates, its revenue fell slightly more than analysts expected. Now market watchers will gauge the company's comments at its post-earnings press conference.

Chief Executive Officer and Managing Director K. Krithivasan, in the post-earnings press conference call, said the revenue for the December quarter was hit by seasonal headwinds and soft demand for discretionary services. The company is seeing early signs of a revival in discretionary spending, he said. "Commentary on early signs of revival in discretionary spend in some verticals is positive and is likely to set a good undertone for CY25 (2025)," Shaji Nair, research analyst, capital market strategy at Mirae Asset Sharekhan, said in a note. Shares of the company closed 1.7% lower at INR 4,038.85 Thursday.

Foreign institutional investors have been net selling shares in the domestic market this month, and this has been a matter of concern for investors who expected inflows from FIIs to support the market this month. FIIs have net sold Indian equities since Friday. These investors net sold shares worth nearly INR 34 billion Wednesday, taking the total net sales since Friday to INR 116.56 billion. The fall of the rupee to a fresh record low Thursday is another worry for market participants. The Indian unit closed at a record low of 85.84 against the dollar Thursday.

Thursday, the Nifty 50 closed at its lowest level since Nov. 21. The 50-stock index, down for the second straight session, closed 0.7% lower at 23526.50 points Thursday. Meanwhile, the BSE Sensex ended at 77620.21 points, down 0.7%. The Nifty 50 continues to struggle with the 23800–23900 resistance zone, suggesting a sideways to mildly bearish trend, Dhupesh Dhameja, Derivatives Analyst, SAMCO Securities, said in a note. A decisive breakout above 24000 points could spark short-covering, potentially lifting the index towards 24500 points, he said. Conversely, a sustained fall below 23500 points would expose the index to further downside risks toward 23200 points, he said.

Shares of Bajaj Auto, which closed over 2% higher Thursday, could rise more in the upcoming sessions. Foreign brokerage firm CLSA had upgraded its rating to 'overweight' from 'underweight' with a target price of INR 9,493, according to an ET Now report. This target price implies an upside of over 7% from Thursday's close. The brokerage is bullish on the stock after its recent steep correction and improving two-wheeler franchise, as per the report. CLSA also reportedly said the two-wheeler maker has been able to maintain its margin at 20% despite scaling up.

Banking stocks were the biggest laggards in the Nifty 50 index Thursday and are expected to fall further over the upcoming sessions. Investors are worried that banks could report lower-than-expected figures for net profit and total income for the December quarter. The recent provisional updates for the quarter which pointed at lower credit growth have slightly dented investor sentiment towards this sector. Heavyweight stock HDFC Bank, which contributed the most to the fall in the Nifty 50 Thursday, is likely to end lower for the second consecutive week.

Investors could sell shares of Tata Elxsi after the company reported lower-than-expected net profit and revenue for the December quarter. On a sequential basis, this was the biggest fall in the company's net profit in 17 quarters. The companies expected to announce their December quarter earnings Friday include CESC and Just Dial.  End

Edited by Deepshikha Bhardwaj

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