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Informist, Wednesday, Mar. 5, 2025

By Akshita Kumar

MUMBAI – Analysts expect the benchmark indices to rise further Thursday owing to factors such as the fall in crude oil prices and expectations that investors may cover their short positions ahead of the weekly expiry of the Nifty 50 options contract. But the overall sentiment is still bearish due to uncertainty around US President Donald Trump's tariff policies, analysts said.

"Since Monday we are witnessing some good buying in the broader market," Ashish Sherigar, technical analyst at NVS Brokerage, said. However, Sherigar said the market is moving based on Trump's actions. "If overnight Trump again comes up with more tariff plans, then the market will take no time to resume its downward journey," he said.

Trump imposed 25% tariff on imports from Mexico and Canada and doubled the 10% duty on Chinese goods from Tuesday. China retaliated with additional tariffs of up to 15% on some US products, while Mexico's President Claudia Sheinbaum said her country would soon respond with tariffs and other measures.

"We do not know how far the tariff war will go. There are more headwinds than tailwinds," Sanjeev Hota, head of research at Sharekhan, said. About valuations, Hota said shares of large-cap companies are near reasonable valuations and in the fair value zone. But in the mid-cap and small-cap space, the correction is not over yet, he said.

Hota said there may be a further 5-6% correction in the mid- and small-cap space on average, with much sharper correction likely in specific stocks. He expects the corporate earnings to become better from the first quarter of the financial year starting Apr. 1 following the revision in income tax rates and recovery in rural demand.

China's recent tariff hike on coking coal from the US could offer some relief to Indian steel producers, credit rating agency S&P Global Ratings said in a report. The 18% tariff is likely to create a surplus of US-origin coking coal in the seaborne market, the agency said. This may lower prices and improve the profitability of Indian steelmakers, which are the largest buyers of seaborne coking coal, the agency said. Shares of steelmakers Tata Steel and JSW Steel Wednesday ended 5% and 3% higher, respectively.

Brokerage Prabhudas Lilladher said in a report that the entry of new players in the wires and cables segment may not have a significant near-term impact on the performance of the existing market leaders. However, given the broader market derating, along with the entry of major players such as UltraTech Cement--whose group company has intensified competition in the paints sector, leading to sectoral derating--may act as a trigger for similar derating in the wires and cables sector, it said. The brokerage expects the wires segment to remain soft, with slightly lower margin improvement in the near term due to raw material pricing.

Wednesday, the Nifty 50 ended at 22337.30 points, up 254.65 points or 1.2%. The 50-stock index snapped a 10-day losing streak, its longest since 1996. The BSE Sensex ended at 73730.23 points, up 740.30 points or 1%. On the downside, 22200 points serves as an immediate support level for the Nifty 50, and a break below this mark could trigger further selling towards the 22000–21800 points range, Mandar Bhojane, technical and derivative analyst at Choice Broking, said. On the upside, immediate resistance is seen at 22550 points, with a critical hurdle near 22700 points, Bhojane said.

The India VIX Wednesday declined 1.16% to 13.67, reflecting reduced market volatility and a decrease in fear among traders. This indicates improved investor confidence and a more stable trading environment, Bhojane said.

Among specific stocks, shares of Zydus Lifesciences will be in focus Thursday. After market hours Wednesday, the pharmaceutical company got final approval from the US Food and Drug Adminstration to manufacture Dasatinib tablets.  End

Edited by Rajeev Pai

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