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Informist, Wednesday, May 7, 2025

By Anjana Therese Antony

MUMBAI – The options chain of Asian Paints shows the stock is likely to fall in the near term amid expectation of likely weak March quarter earnings, due Thursday. The paint maker is expected to post a subdued growth for the sixth consecutive quarter, weighed by weak pricing and rise in input costs. The stock closed 3.5% lower at INR 2,334.10 Wednesday on the National Stock Exchange after hitting a one-month low of INR 2,318.50 during the day. 

"Stock is witnessing time wise correction," Emkay Global Financial Services said in a note, adding that the range for the stock is seen at INR 2,300-INR 2,500. The maximum addition of open interest was at INR 2,400 call and INR 2,300 put contracts expiring May 29. Premiums on INR 2,340-INR 2,600 call options declined 46-55% and those on INR 2,300-INR 1,900 put strikes increased 120-183%. 

For the March quarter, the company's consolidated net profit is seen falling 15% on year to INR 10.6 billion and revenue is likely to decline 2% to 85.90 billion, according to the average of estimates from 13 broking firms. many broking firms said they expect the company to report a lower volume growth due to sluggish urban demand, though there has been a gradual recovery on the rural front. In addition, higher operating costs and insufficient price hikes are likely to shrink its margins, some broking firm said in their earnings preview report. The management's post-earnings call with investors is scheduled at 1700 IST Thursday and market participants will look for comments on business outlook, margins, demand trends, and volume growth.

The overall Indian equity market is likely to remain in a small range in the near term. Though there are some near term risks such as the aggravated diplomatic relation between India and Pakistan as well as uncertainty around tariffs, analysts said there are more positive reasons in favour of the bulls. These include recurring buy interest from foreign investors in the last 14 sessions, the latest free trade agreement with the UK, expectations of postitive outcome from trade talks with the US, and no major shocks from March quarter earnings so far, analysts said. On Wednesday, the Nifty 50 closed 0.1% higher at 24414.40 points after falling almost 1% in early trade. 

"Some kind of a move was expected from India...So that anxiety is over for the market," said Pankaj Pandey, head of research at ICICI Securities. "From a macro perspective, things have been getting better for us, be it soft crude oil prices or the prospects of rate cut getting stronger," he said. 

Experts also do not expect the current geopolitical tensions to lead to sharp sell-off in the domestic market. Though the conflict could lead to some near-term volatility, analysts said the worst is behind. Investors now wait for the US Federal Reserve's monetary policy outcome due later Wednesday. The Fed is widely expected to keep interest rates steady at 4.25-4.50% and global investors will look for Chairperson Jerome Powell's comments on inflation, tariffs, and US economic growth. 

--Nifty 50 May closed at 24472.00, up 40.60 points; 57.60-point premium to the spot index

--Nifty 50 Jun closed at 24584.70, up 49.30 points; 170.30-point premium to the spot index

--Nifty 50 Jul closed at 24711.20, up 39.10 points; 296.80-point premium to the spot index

BSE, Punjab National Bank, Tata Motors, Reliance Industries, HDFC Bank, ICICI Bank, Polycab India, State Bank of India, Bank of Baroda, Bajaj Finance, Hindustan Aeronautics, One 97 Communications, Asian Paints, Indian Hotels Co., InterGlobe Aviation, Polycab India, and Bharti Airtel were the most active underlying stocks Wednesday.  End

Edited by Akul Nishant Akhoury

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