More Stories

Informist, Monday, Sep 2, 2024

By Noel John

MUMBAI – Headline equity indices ended the first session of September with record gains, led by financial services, information technology, and fast-moving consumer goods stocks. Even though the indices ended at record closing highs, they came off their record intraday highs in the second half of the session as investors sold for profit, analysts said. The Nifty 50 extended gains for the 13th straight session and rose 4.7% during the period, while the Sensex extended gains for the 10th straight session, rising 2.7%. 

The Nifty 50 and the Sensex ended 0.2% higher each at 25278.70 points and 82559.84 points, respectively. The Nifty 50 hit a record intraday high of 25333.65 points during the day, while the Sensex hit a record high of 82732.95 points in pre-open session.  The 50-stock index is now expected to find support at 25000 points and face resistance at 25500 points. 

Today, the indices moved in a narrow range with stock-specific action, Sunny Agrawal, head of fundamental equity research at SBI Securities, said. The Nifty 50 index moved in a narrow range of 100 points, while the Sensex moved in a range of 280 points. While shares of Hero MotoCorp and Bajaj Auto traded in the green owing to robust sales data for August, Bajaj Finserv and Bajaj Finance traded higher ahead of Bajaj Home Finance's initial public offering, Agrawal said. Similarly, shares of oil marketing companies were in positive territory after the price hike for liquefied petroleum gas cylinders for commercial use during the weekend, he added. 

In a report today, Emkay Global said the upside for the Nifty 50 index is limited to 4% from current levels as the brokerage sees an extended period of sideways movement. The focus now will be on generating ideas in the small-cap and mid-cap spaces, where the brokerage house still sees pockets of value despite some segments looking very frothy. 

Shares of IT companies extended gains due to heightened hopes of a rate cut by the US Federal Reserve and these companies are expected to gain at least 4-5% more before the announcement, Saral Seth, vice-president of institutional equities at IndSec Securities, said. The Nifty IT index extended gains for the sixth straight session and has risen 4.6% during the period. The US Federal Open Market Committee will announce its decision on interest rates on Sep 18. 

Emkay Global today said it was overweight on IT companies as it sees earnings upgrades for these companies, despite elevated valuations, due to a likely rate cut in the US. However, the brokerage cut the rating of FMCG companies to 'neutral' due to expensive valuations, despite a positive operating environment.

Shares of Bajaj Finance and Bajaj Finserv extended gains from last week and ended over 3% higher to become the top gainers in the Nifty 50 index. Shares of Bajaj Finance extended gains for the sixth straight session and rose 10.5% during the period. Today, the stock ended 3.3% higher at 7,440.05 rupees. Shares of Bajaj Finance are expected to rise further to 9,000 rupees owing to positive sentiment around the initial public offering of Bajaj Housing Finance and as it has underperformed the Nifty 50 index in the last two years, a research analyst with a domestic brokerage said. 

Shares of automobile majors Hero MotoCorp and Bajaj Auto were among the major gainers in the Nifty 50 after these companies reported robust sales data for August. While overall two-wheeler sales were good in August, those of four-wheelers were weak, Seth of IndSec Securities, said. Monthly sales of commercial vehicles were also weak ahead of festive season sales, Seth added. 

Hero MotoCorp's shares rose after the company's total sales in August rose nearly 5% on year to 512,360 units. The company said its monthly sales were marginally impacted by supply shortages, which would be made up for in September. Further, the company said it was geared up for the upcoming festival season, when it expects healthy growth.  

Shares of Bajaj Auto also rose over 2% after its total sales for August rose to 397,804 units from 341,648 units a year ago. The company sold 335,178 two-wheelers in August, higher than the 285,031 units sold in the same period a year ago. The stock has extended gains for the 10th straight session, gaining nearly 14% during the period. 

Gujarat Gas ended 12% higher at 680 rupees and was the top gainer in the Nifty 200, after the board of Gujarat State Petronet approved the merger of Gujarat State Petroleum Corp, Gujarat State Petronet, and GSPC Energy with Gujarat Gas. Following the amalgamation, the gas transmission business undertaking would be demerged as GSPL Transmission. Tracking the development, multiple brokerages have raised the rating and target price of Gujarat Gas. 

Brokerage firm Equirus Capital has upgraded the stock to 'add' from 'reduce' and raised the target price to 667 rupees from 580 rupees, as per various media reports. The brokerage said the merger and demerger plan was well thought of, adding that it would benefit from its position as second-largest gas trading company in India. 

Brokerage firm Emkay Global has upgraded Gujarat Gas to 'reduce' from 'sell' and hiked the target price by 100 rupees to 600 rupees. "The merged entity would benefit from size, simple structure, and synergies, while challenges likely being faced are complexity of business with global gas exposure, capital allocation, and numerous Gujarat govt entities still holding sizeable stake," Emkay Global said in a research report today. 

On the downside, shares of Dr Reddy's were among the major laggards in the Nifty 50 and ended 2.3% lower. The stock fell sharply after China's drug regulator, National Medical Products Administration, and National Drug Joint Procurement Office suspended the import, sale, and use of hypertension drug Atomoxetine Hydrochloride capsules from Dr Reddy's Laboratories, effective Aug 30. 

This is a significant setback as China is one of the key markets for the company, Maitri Sheth, research analyst with Choice International, said. "Additionally, being added to the 'violation list' further complicates the situation, as it suspends the company's eligibility to participate in China's national centralised drug procurement activities until February 2026," Sheth said.

However, the analyst believes that the company could potentially mitigate these challenges by addressing the issues highlighted by the regulator. "Upon resolution, the company might reapply to the National Medical Products Administration, either by providing additional data or requesting a suspension lift," Sheth said. 

* Of the Nifty 50 stocks, 27 rose and 23 fell

* Of the Sensex stocks, 18 rose and 12 fell

* On the NSE, 1,169 stocks rose, 1,631 fell, and 80 were unchanged

* On the BSE, 1,776 stocks rose, 2,262 fell, and 149 were unchanged

* Nifty FMCG: up 0.8%; Nifty OSU Bank: up 0.5%; Nifty Metal: down 1%

BSE                                               NSE
Sensex: 82559.84, up 194.07 points or 0.2%        Nifty 50: 25278.70, up 42.80 points or 0.2%

End

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.