India Stocks Outlook
Seen up Fri; earnings of 3 Nifty 50 majors to lend cues
This story was originally published at 18:43 IST on 16 January 2025
Register to read our real-time news.Informist, Thursday, Jan. 16, 2025
By Alina Geogy
MUMBAI – The December quarter earnings of three Nifty 50 majors--Reliance Industries, Axis Bank, and Infosys--could provide key triggers for the market Friday. These three companies are among the top 10 stocks in the 50-stock index with respect to weightage. Benchmark indices may rise for the fourth consecutive session Friday as investors could track largely positive cues from global markets, which had boosted market sentiment Thursday, too. Hopes of a favourable commentary by companies post Oct-Dec earnings and support from domestic institutional investors in the market may also keep the indices up.
However, gains may be capped due to concern about any negative surprises on the earnings front, further depreciation of the rupee, and the rise in crude oil prices. The Nifty 50 and the BSE Sensex Thursday ended 0.4% higher each at 23311.80 points and 77042.82 points, respectively. They closed higher for the third day in a row. Despite rising for three consecutive days, the indices are still in the red this week as they were unable to recover from the sharp decline on Monday.
Axis Bank, which has a weightage of nearly 3% in the Nifty 50 index, reported its Oct-Dec earnings slightly after market hours Thursday. The bank posted a mere 3.8% on-year increase in its net profit for the quarter ended December as weak growth in interest income and doubling of provisions weighed. The lender's net profit rose to INR 63.04 billion, but missed analysts' estimate of INR 64.43 billion. Shares of the private bank closed 1.1% higher at INR 1,038 Thursday.
On other hand, Infosys' INR 68.06-billion consolidated net profit for Oct-Dec not only beat analysts' estimates, but was also the fastest in three quarters. Its top line also beat analysts' expectations, but its pace of growth was the slowest in three quarters. Infosys, with a weightage of over 6% in the Nifty 50 index, closed 1.1% lower at INR 1,928.45 Thursday.
Market participants also await the latest data about foreign institutional investor activity, particularly since these investors have been net selling Indian equities in every session since Jan. 3. Despite continued net selling by FIIs for the past sessions, the benchmark indices have been largely resilient, and this has been because of the buying support from domestic institutional investors. On Wednesday, FIIs net sold shares worth INR 45.33 billion on the exchanges, while DIIs net purchased shares worth INR 36.83 billion.
The ongoing depreciation in the rupee is also another factor being closely watched by market participants. After closing higher Wednesday, the rupee resumed its fall. The rupee had fallen beyond 86 to the dollar Monday. The Indian unit closed at 86.55 to the dollar Thursday.
Shares of railway-linked companies could gain some more over the coming days after the sharp gains Thursday. Shares of IRCON International, Jupiter Wagons, RailTel Corp. of India had gained 9-16% Thursday. Analysts have a positive outlook for railway-linked companies due to expectation that the government will focus more on modernising coaches and upgrading rail infrastructure. There will be a pick-up in order inflow for the railway industry in the March quarter, and the momentum of orders may pick up further in 2025-26 (Apr-Mar), as the government looks to upgrade rolling stock and expand the rail network, and also has a large pipeline for the automatic train protection system Kavach, Elara Securities said in a report Wednesday.
Among specific stocks, shares of Havells could take a hit as the company reported an on-year fall in net profit to INR 2.83 billion for the December quarter, instead of a rise to INR 3.47 billion as per analysts' estimates. Shares of Mastek could also fall after the company's consolidated net profit for Oct-Dec declined 26.4% sequentially. End
US$1 = INR 86.55
Edited by Akul Nishant Akhoury
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