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Informist, Wednesday, May 21, 2025

By Akash Mandal

MUMBAI – The benchmark indices are likely to move sideways for the rest of the week with some volatility expected, before they resume their upward trajectory next week, analysts said. Buying interest from retail and foreign investors, expectations of a rate cut in the Reserve Bank of India's policy meeting early next month, and hopes of a favourable trade deal with the US are positive triggers for the market in the short term, analysts said. Investors will also keep their focus on corporate earnings.

"Technically, the charts show that there might be some volatility due to profit booking at higher levels," Jatin Gedia, technical research analyst at Mirae Asset Sharekhan, said. Currently, the volatility in the market is high, and only when the volatility reduces will there be significant movement in either direction in the Nifty 50, he said. Wednesday, the India VIX, the Street's fear gauge, ended nearly 1% higher at 17.5475. The indicator has surged 6% in the past three sessions. Gedia does not see much impact on the market due to the weekly expiry of the derivatives contract of the Nifty 50 Thursday.

Wednesday, the Nifty 50 ended at 24813.45 points, up 129.55 points or 0.5%. The BSE Sensex closed at 81596.63 points, up 410.19 points or 0.5%. For Thursday, analysts expect the Nifty 50 to move in a range of 24750-24950 points.

Morgan Stanley Research is bullish on the Indian market and expects the Sensex to rise to 89000 points by June 2026, which implies an upside of 9% from Wednesday's spot price. The brokerage said it is positive on the domestic market due to strong fundamentals such as low inflation, lower crude oil prices, and expectations of further rate cuts by the RBI. It also expects earnings growth to be in the mid-to-high teens annually over the next 3-5 years on the back of a likely rise in capital expenditure by the private sector, releveraging of corporate balance sheets, and a slow revival in discretionary consumption.

However, Kotak Institutional Equities is more conservative in its view on the domestic market. The sharp rally in Indian equities over the past few weeks does not paint an accurate picture of the chaotic global trade conditions, limited progress in India-US trade negotiations, weakening earnings trajectory, and lofty valuations, the brokerage said in a report Sunday. "Notwithstanding the decent improvement in India's macro-outlook, the Indian market appears to be driven by narratives again, despite their poor record," it said.

Investors will also eye the foreign outflows in domestic equities as many analysts believe positive trade talks between the US and China might be a trigger for foreign institutional investors to switch to China. Tuesday, FIIs net sold Indian shares worth INR 100.161 billion, the sharpest sell-off in nearly three months. They have net sold Indian equities in four of the last eight sessions after heavily buying for 16 straight sessions. 

Three Nifty 50 companies will report their earnings Thursday--Grasim Industries, ITC, and Sun Pharmaceutical Industries. Grasim is likely to report a net loss for the second straight quarter owing to high operating costs in the company's new paints and business-to-business e-commerce segments. It is expected to report a standalone net loss of INR 1.32 billion for the March quarter, compared to a net profit of INR 2.75 billion a year ago.

ITC's bottom line for the quarter is seen falling 2% on year despite a 4% rise in its top line. On the other hand, Sun Pharma is expected to report robust earnings for the quarter, with its consolidated net profit seen rising 9% on year and revenue increasing 11%. GMR Airports and Container Corp. of India will also report their earnings for the quarter Thursday.  End

Edited by Rajeev Pai

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