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Informist, Monday, Mar. 17, 2025

By Gopika Balasubramanium

MUMBAI – Analysts expect the benchmark indices to rise more Tuesday and remain steady as market sentiment has improved from what it was five months ago. The fact that the Trump-led US administration has not made any tariff announcements over the weekend and fall in outflows of foreign investors has provided relief to the market, which has been seeing outflows to the US, China, and other European countries, analysts said.

However, uncertainty about US tariff and trade policies still persists and any negative announcement may weigh on investor sentiment. Investors will also take cues from the monetary policy outcome of the US Federal Reserve late Wednesday.

"It is a tussle between bulls and bears in the market, and this is likely to continue in the near-term," Ajit Mishra, senior vice president of research at Religare Broking, said. "We saw a price-wise correction in the past few months and now there is a shift to a time-wise correction," Mishra said. However, there is strength in certain stocks pertaining to financial services, metal, and pharmaceutical sectors, which will see significant upside, he said.

Though the selling pressure from foreign investors has eased, research analysts do not expect major flows into India until there are clear signs of improvement in corporate earnings and ease in overall valuations. On Thursday, foreign investors sold shares to the tune of $98.44 million, data from National Securities Depository showed. This is sharply lower from net sales of $1.4 billion on Mar. 3.

The monetary policy meeting of Bank of Japan and US Federal Reserve will commence Tuesday and their outcome will be announced Wednesday. Analysts at Nomura Global Market Research believe the US Fed will likely hold its rates steady at 4.25-4.50% as it "remains patient amid growing uncertainty". Downside risks to growth and uncertainty around trade policy will likely lead the US Fed to take a cautious approach, it said in a research report Monday. Nomura, however, believes the Fed will follow through with the two rate cuts in 2025. According to the CME FedWatch Tool, there is a 99% chance that the US Fed will hold rates steady for the second time after cutting them in the previous three consecutive meetings since September.

Back home, Religare Broking's Mishra sees upside in private sector banks such as HDFC Bank, Kotak Mahindra Bank, and ICICI Bank. Among the non-banking financial companies, he sees more gains in Muthoot Finance, Bajaj Finserv, Bajaj Finance, and Shriram Finance.

Mishra said the stress in automobile stocks will likely continue, but he sees opportunities in select companies such as Mahindra & Mahindra, Eicher Motors, and TVS Motor Co., which have significant market share in both rural and urban markets. He said Maruti Suzuki India also fared better than Hyundai Motors India.

On Monday, the Nifty 50 ended at 22508.75 points, up 111.55 points or 0.5%, and the BSE Sensex closed at 74169.95 points, up 341.04 points or 0.5%. Gains in heavyweight banking and financial services stocks such as Axis Bank, Bajaj Finserv, ICICI Bank, and Bajaj Finance helped the 50-stock index hold on to gains throughout the day.

Mishra expects the Nifty 50 to face resistance at 22600 points and it will most likely break this hurdle in the next two or more trading sessions, supported by gains in heavyweight stocks. The index will find support at 22250 points and any breach below this level can lead the index to retest 21800-22000 points, he said.

When asked about the March quarter earnings, an analyst at a mid-sized brokerage firm said that the slowdown in earnings will continue due to muted demand, lower-than-expected government spending, and slowdown in India's economic growth. He said the indices are likely to be in a range till the start of the next earnings season, which starts before mid-April. He expects the Reserve Bank of India to cut interest rates in the policy meeting in April, given that consumer inflation fell to 3.61% in February, below the 4% target of the apex bank for the first time in six months.  End

US$1 = INR 86.80

Edited by Ashish Shirke

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