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Informist, Friday, Jan. 17, 2025

By Alina Geogy

MUMBAI – Benchmark indices may open higher Monday due to the current oversold condition of the market, analysts said. However, potential gains could be capped owing to caution as President-elect Donald Trump assumes office Monday, analysts said. With the earnings season in full swing, investor focus may shift to Wipro and Tech Mahindra after the companies detailed their earnings for the December quarter after market hours on Friday.

The benchmark indices have ended lower for the second consecutive week. On Friday, the Nifty 50 closed at 23203.20 points, down 0.5%, and the Sensex closed at 76619.33 points, down 0.6%. For the Nifty 50, 23300 points would act as a key resistance level above which there could be a pull-back rally till 23500-23590 points, Amol Athawale, vice-president of technical research at Kotak Securities, said in a note. On the other hand, 23100 points will serve as a key support zone, below which the index could slip to 23000-22850 points, he said.

Investors could have mixed reactions to the shares of the two major information technology players which posted their earnings for the December quarter after market hours on Friday. Wipro reported a consolidated net profit of INR 33.54 billion for the December quarter, beating analysts' estimates. However, Tech Mahindra's consolidated net profit missed the Street's view, falling over 21% sequentially to INR 9.83 billion.

Investors also await the earnings of Kotak Mahindra Bank, which will announce its quarterly earnings on Saturday. The bank's net profit is seen rising over 11% on year to INR 33.44 billion for the quarter ended December, as per the average of estimates from 14 brokerages. 

Investors are uncertain about policy changes in the US after the Trump administration takes over, because of expectations of tariff hikes and corporate tax cuts. These policy changes could lead to inflationary pressure in the US, thereby reducing the prospects of rate cuts by the US Federal Reserve this year. The US Fed is widely expected to keep rates unchanged at its monetary policy meeting later in the month, according to the CME FedWatch Tool.

Investors will watch out for any comments from officials of the US Fed that could hint at the likelihood of rate cuts this year. On Thursday, media reports quoted Fed governor Christopher Waller saying that the Fed could resume cutting interest rates in the first half of the year if inflation continues to show that it has cooled. Waller said "you could think about restarting rate cuts several months from now."

Investor sentiment has been dented after recent outflows by foreign portfolio investors, continued depreciation of the rupee, and a rise in crude oil prices, analysts said. This has largely offset the 'decent' earnings for the December quarter reported by large-cap companies, some said. Foreign institutional investors have been net selling shares in the domestic market in every session since Jan. 3. On Thursday, foreign investors net sold shares worth over INR 43 billion on the exchanges. The rupee ended at 86.61 a dollar, only slightly above the lifetime low of 86.65 it hit on Tuesday. At 1745 IST, the March futures of Brent crude were slightly higher on the Intercontinental Exchange at $81.32 The Brent crude futures resumed a rise beyond $81 per barrel on Friday after a breather the previous day.

Railway stocks have been rising this week and are expected to extend gains over the coming days. One of the factors behind the rally is the expectation of a 15-20% increase in capital expenditure for the Indian Railways in the Budget to over INR 3 trillion in 2025-26 (Apr-Mar), Ameya Ranadive, senior technical analyst at StoxBox, said in a note.  End

US$1 = INR 86.61

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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