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Informist, Wednesday, Jan. 29, 2025

By Akash Mandal

MUMBAI – The benchmark indices ended higher for the second straight session on Wednesday, led mainly by information technology, banks, and financial services stocks. The indices have fully recovered from the sharp fall on Monday, with concerns about the recently-launched low-cost open-source artificial intelligence model of Chinese company DeepSeek easing.

Two analysts attributed the rise in the benchmark indices to short covering by foreign investors, while one said there was no short covering. "If there is short covering, the index would reach 24000," Jigar Patel, senior manager of equity research at Anand Rathi Shares & Stock Brokers, said. In fact, Patel does not expect short covering the whole week.

There is positivity around the domestic IT companies since their post-earnings commentary for the December quarter has been cautiously optimistic compared to the previous three quarters, Vaibhav Chechani, lead banking analyst at Nirmal Bang Institutional Equities, said. There is also a noticeable pickup in discretionary spending by US clients, who account for a significant portion of the revenues of domestic IT companies, Chechani said. This can be inferred from the rise in small deal pipelines reported by these companies. Many of these players are also undertaking digital and artificial intelligence transformation projects on behalf of their US-based clients, which shows higher discretionary spending, the analyst said.

Mid-cap IT stocks such as Persistent Systems and Mphasis ended up around 6% and 4%, respectively. All the stocks in the Nifty IT ended in the green. Shares of L&T Technology Services ended over 4% higher after it won an $80-million deal from a US-based manufacturer of industrial products and solutions. Netweb Technologies India snapped an eight-day losing run and hit the 10% upper band after the company said DeepSeek's new model will provide significant growth opportunity to the company.

Blue-chip IT stocks, which have over 14% weightage in the Nifty 50, pushed the index 0.3% higher. The Nifty 50 closed at 23163.10 points, up 205.85 points or 0.9%, and the BSE Sensex ended at 76532.96 points, up 631.55 points or 0.8%. Only 10 stocks in the Nifty 50 ended in the red. Broader market indices took a breather from the sharp fall over the past three sessions, with the Nifty Small- and Nifty Mid-cap indices ending 2-3% higher.

Barring Nifty FMCG, all other sectoral indices gained. Nifty Realty was the top gainer, up almost 3%, with all real estate stocks in the index ending higher. Brigade Enterprises was the top-gaining constituent and closed nearly 8% higher.

Among banks and financial services stocks, Shriram Finance, SBI Life Insurance Co., and HDFC Life Insurance Co. ending nearly 3-5% higher. The sector also pushed the Nifty 50 by nearly 0.3%.

Auto stocks rose for the second straight day, with shares of Bajaj Auto gaining almost 3% despite reporting a slowdown in earnings for the December quarter. However, the company's exports were robust, and analysts are positive about it and the electric two-wheeler segment. After market hours on Tuesday, the company reported a net profit of INR 21.09 billion on a revenue of INR 128.07 billion for the December quarter.

Shares of Tata Motors ended up over 3% ahead of earnings, which were announced after market hours. Shares of TVS Motor Co. ended 5.5% higher after its net profit and revenue for the quarter rose on year. Shares Maruti Suzuki India gave up gains and closed more than 1% lower after the company's net profit of INR 35.25 billion for the December quarter missed analysts' estimates of INR 36.17 billion.

Among other stocks, Suzlon Energy hit the 5% upper band at INR 52.77 in early trade after an increase in sales volume almost doubled the company's consolidated net profit and revenue for the December quarter. CG Power and Industrial Solutions rose 9% despite mixed earnings. Small-cap stocks such as Anant Raj and Syrma SGS Technology hit their respective upper bands of 10% and 20%, after plunging 10-20% Tuesday.

Shares of KPIT Technologies surged almost 9% despite an on-year fall in consolidated net profit for Oct-Dec, as the company raised its earnings before interest, taxes, depreciation, and amortisation guidance for 2024-25 (Apr-Mar).

On the other hand, shares of Jupiter Wagons fell over 8% and were the worst hit in the Nifty 500 despite its bottom line and top line for the December quarter rising on year. Shares of Bosch and JSW Energy closed around 6% lower as their earnings were below expectations.

Shares of ITC Hotels, the demerged entity of ITC, listed at INR 180 per share on the National Stock Exchange Wednesday, a discount of 31% discount to its implied price of INR 260. The stock ended the session at INR 171.85, down 34%.

* Of the Nifty 50 stocks, 40 rose and 10 fell

* Of the Sensex stocks, 24 rose and 6 fell

* On the NSE, 2,311 stocks rose, 528 fell, and 70 were unchanged

* On the BSE, 2,978 stocks rose, 1,011 fell, and 93 were unchanged

* Nifty Realty: up 2.9%; Nifty IT: up 2.6%; Nifty FMCG: down 0.5%

BSE                                                 NSE

76532.96 points, up 631.55 points or 0.8%           23163.10 points, up 205.85 points or 0.9%

End

Edited by Ashish Shirke

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