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Informist, Wednesday, Jan. 29, 2025

By Akash Mandal

MUMBAI – The benchmark indices are expected to open higher again Thursday and extend gains for a third consecutive session. The fall in the indices appears to have bottomed out, and the rally is expected to continue until the Union Budget, due Saturday, analysts said. Investors also await the outcome of the US Federal Reserve's monetary policy meeting due after midnight. According to the CME Fedwatch tool, there is a 99.5% probability that the Fed will keep interest rates steady this time, after cutting them in the previous three meetings. The greater focus will be on the central bank's forward-looking commentary for hints about the interest-rate trajectory in the US.

Foreign investors are slightly reducing their short positions in index futures, with the long-short ratio increasing to 25%, from 20% earlier. A similar level was observed ahead of last year's general election, when foreign institutional investors held record short positions. Some volatility is also expected Thursday ahead of the monthly expiry of Nifty 50 futures and options contracts.

Despite the policy uncertainty under the new administration of US President Donald Trump, the outflow of foreign funds, and weak corporate results weighing on the domestic market, analysts are optimistic about the medium- to long-term prospects. "With the recent market fall of (approximately) 13-16% from the peak, valuations have turned compelling and warrant a risk-reward re-look," Anand Rathi Share and Stock Brokers said in a research report Wednesday. "In the medium-to-longer term, macro fundamentals, corporate earnings, domestic flows to the equity market, and equity valuations outweigh current concerns," it said.

On Thursday, headline indices are expected to open higher and the Nifty 50 might test the 23400 points level, Jigar Patel, senior manager of equity research at Anand Rathi Share and Stock Brokers, said. However, in case of a fall, the index may find support at 23000 points. The Nifty 50 closed 0.9% higher Wednesday at 23163.10 points. The BSE Sensex ended 0.8% higher at 76532.96 points. Brijesh Ail, head of technical and derivatives at IDBI Capital Markets & Securities, also sees a positive opening for the benchmark indices Thursday, and expects the Nifty 50 to reach 23500 points by Friday.

Shares of Tata Motors will be in focus after the company's consolidated net profit for the December quarter fell more than 22% on year to INR 54.51 billion, missing analysts' estimates of INR 64.02 billion by a wide margin. Investors will also react to the earnings of SRF, which beat the Street's view on its bottom line. Bajaj Finance's net profit of INR 42.47 billion for the quarter also beat the market's expectations of INR 41.72 billion.

Thursday will be a busy day on the earnings front. Among large-cap players, Adani Enterprises, Adani Ports and Special Economic Zone, Bajaj Finserv, Bharat Electronics, Larsen & Toubro, and Tata Consumer Products will declare their quarterly results. Other than these six, 24 companies that are part of the Nifty 500 index will also post their December quarter financial performance.  End

US$1 = INR 86.54

Edited by Rajeev Pai

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