It’s been a very tough week for the markets, particularly on Thursday, where the sell-off came from nowhere with global cues looking quite okay, but for the Indian markets on the domestic front, investors are searching for some good news because there has been so much negativity in the past few days so some bit of positive news is something that the bulls will be looking for.
We are now getting close to 24,690 levels, which is essentially the low that we saw just a few days back. To be precise, it was 7th of October, and hopefully we should hold on to these levels. Our understanding of the high-frequency data at a time when we are into the festive season is that things are looking a bit subdued.
We are also having lots of earnings, and it was expected to be muted, with many now looking for the second half of the year, but we are seeing stock-specific actions, and most of the earnings that have come through don’t excite us.
A lot of near-term indicators suggest that the market is oversold because the 200-point fall in Nifty on Thursday was unanticipated, but the markets kept falling. Will the indicators work in the short term?
This is something we will have to wait for, but one of them is important, i.e., your Nifty Open Interest Put Call Ratio (PCR), which has now fallen to 0.65, the lowest since Mar’24 and if we go back in history for the last many years, at about 0.65-0.7 has marked a short term bottom and then markets do what it wants to do, typically moving at higher levels.
Another reason for the market fall is the continuous selling by FIIs, which is more than Rs 75,000 crore this month, and the last time that we saw such relentless selling was in Mar’20 (Covid-19 pandemic).
Despite this decline, there may be good buying opportunities for long-term investors with underlying bullish sentiment driven by strong domestic fund buying and a significant 182 per cent increase in direct tax collections over the past decade to over Rs 19.60 lakh crore in FY24, supported by favourable macroeconomic data.
With this, let me present to you our weekly market review.
How Did the Markets Fare Last Week?
On a weekly basis ended on Friday, the Indian benchmark indices ended in red. Sensex and Nifty were down between 0.2-0.4 per cent each, while Midcaps were down 1.0 per cent .
What Might Keep the Markets Busy Into the Next Week?
The equity benchmark indices will continue to take cues from the global markets. As we have started with Q2FY25 earnings, markets will react to stock-specific actions based on earnings reports and management commentary, setting the tone for the coming quarters.
Apart from this, on the domestic front, we have data releases like bank loan growth, FX reserves, HSBC PMI numbers across services, manufacturing, etc.
On the global front, we have various Fed officials’ speeches, IMF Meeting, Initial Jobless Claims, S&P Global PMI numbers across services, manufacturing, etc., that will keep investors busy.
Crude and FII Flows
Brent crude oil prices steadied at USD 74/bbl following losses of more than 4 per cent intraday, on easing geopolitical worries and weakening Chinese demand.
On the other hand, FIIs were net sellers for the week.
Sector in Focus
IT, PSU banks and metal remained in focus during the week.
Stock Market Holiday: NSE, BSE To Remain Closed For Guru Nanak Jayanti
Stocks That Made Headlines During The Week
IGL and MGL:
IGL and MGL, two of India’s biggest city-gas distributors, expect their profits to be hit after allocation of domestically-produced natural gas was cut by about a fifth, with effect from 16th Oct’24. IGL’s supply was cut by 21 per cent , while Mahanagar was reduced by 20 per cent .
Manappuram Finance:
The Reserve Bank of India (RBI) on 17th October 2024, directed Asirvad Micro Finance Limited (AMFL), a material subsidiary of Manappuram Finance, to cease and desist from sanction or disbursal of loans effective from close of business of 21st October 2024.
The direction is based on material supervisory concerns observed in the Pricing Policy of the subsidiary company in terms of its Weighted Average Lending Rate (WALR) and the Interest Spread charged over its cost of funds, which are found to be excessive and not in adherence with the regulations as laid down in the RBI’s Master Direction on Regulatory Framework for Microfinance Loans dated 14th March 2022 and the RBI’s Master Direction on Non-Banking Financial Company – Scale Based Regulation dated 19th October 2023 (as updated from time to time).
Intellect Design:
The company announced its partnership with National Bank of Fujairah (NBF), an award-winning UAE-based full-service corporate bank, to enhance its digital capabilities. This deal marks the first Microsoft Azure-managed service for Intellect’s eMACH.ai Cloud for Wholesale Banking in the Middle East.
Infosys:
Infosys delivered broad based growth performance with USD 4,894 million in Q2FY25 revenues, a QoQ growth of 3.1 per cent and YoY growth of 3.3 per cent in constant currency. Operating margin for Q2FY25 was at 21.1 per cent . Free cash flow for Q2FY25 was at USD 839 million, growing 25.2 per cent YoY. TCV of large deal wins was USD 2.4 billion, 41 per cent being net new.
In terms of guidance, the company has now increased its revenue growth guidance from 3-4 per cent earlier to 3.75-4.5 per cent with operating margin at similar levels of 20-22 per cent for FY25.
Wipro:
Wipro posted a 6.2 per cent QoQ rise in its net profit to Rs 3,227 crore in Q2FY25, which is higher than the consensus estimate of Rs 3,009 crore. Further, Wipro has tapered its guidance for the next quarter to (-) 2.0 per cent to 0.0 per cent in CC terms while it had guided in the range of -1 to 1 per cent for Q2FY25 previously.
Wipro continued to expand its top accounts, large deal bookings surpassed USD 1 billion once again, and Capco maintained its momentum for another consecutive quarter.
Further, the board has also announced bonus issue in the ratio of 1:1.
Axis Bank:
The Bank’s Net Interest Income (NII) grew 9 per cent YoY to Rs 13,483 crore with Net Interest Margin (NIM) for Q2FY25 coming at 3.99 per cent . The Bank’s balance sheet grew 12 per cent YoY and stood at Rs 15,05,658 crore as on 30th September 2024. The total deposits grew 14 per cent YoY on month end basis, of which current account deposits grew 8 per cent YoY and saving account deposits grew 2 per cent YoY.
In terms of asset quality, Bank’s reported Gross NPA and Net NPA levels were 1.44 per cent and 0.34 per cent respectively as against 1.54 per cent and 0.34 per cent as on 30th June 2024.
If we analyse the numbers, Bank’s loan growth is the lowest in 12 quarters YoY; NIM at 8 quarter low; core operating profits decline QoQ, first time in 5 quarters.
Ultratech Cement:
The company announced commissioning of an additional 1.2 mtpa grinding capacity at its existing unit situated at Arakkonam, Tamil Nadu.
This addition in capacity forms part of the 22.6 mtpa capacity expansion announced in June 2022, as informed by the company earlier on 2nd June 2022
Bikaji Foods:
Bikaji Foods Retail Limited (“BFRL”), a wholly-owned subsidiary of Bikaji Foods will make a strategic investment of an amount not exceeding Rs 131.01 crore in Hazelnut Factory Food Products Private Limited (“THF”) for acquisition of its 53.02 per cent of total issued and paid-up equity share capital, in tranches.
This acquisition is a part of overall strategy to develop and expand its Quick Service Restaurant (QSR) business vertical through a comprehensive House of Brand strategy.
Bajaj Auto:
The Board at its meeting held on 16 October 2024, have approved the additional investment in the equity share capital of Bajaj Brazil, a wholly owned subsidiary of up to USD 10 million which is equivalent to Rs 84 crore in a phased manner. This additional capital infusion by Bajaj Auto Limited in Bajaj Brazil is to fund for business expansion and the needs of the growing business.
The company also announced its results for Q2FY25 wherein the revenue from operations crossed Rs 13,000 crore for the first time while EBITDA registered its best ever figures at Rs 2,653 crore, a growth of 24 per cent YoY and margins at >20 per cent again. Not only this, the company also delivered a new record for PAT at Rs 2,216 crore, reflecting a growth of 21 per cent YoY. To summarise, this was a quarter of record high sales and profits along with a decisive scale up of the Green Energy portfolio.
RVNL:
Rail Vikas Nigam emerges as the Lowest Bidder (L1) from Maharashtra Metro Rail Corporation Limited for construction of elevated metro stations namely Hingna Mount View, Rajiv Nagar, Wanadongri, APMC, Raipur, Hingna Bus Station, Hingna, Pardi, Kapsi Khurd and Transport Nagar of NMRP phase-2 worth Rs 270 crore. The timeline for completion of the said project is 30 months.
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