Informist, Monday, Aug 14, 2023
By Neeshita Beura
MUMBAI – Benchmark equity indices ended marginally higher today on the back of gains in oil and gas, and information technology stocks, after being in negative territory for most of the session.
Both the Nifty 50 and the Sensex opened lower today, tracking weakness in global markets. Soon after opening, the benchmarks declined further due to a fall in shares of financial services companies and of Adani Enterprises and Adani Ports and Special Economic Zone. However, the indices started recovering at 1400 IST to end marginally higher.
Reliance Industries and Oil and Natural Gas Corp led the gains among oil and gas companies, while Infosys and LTIMindtree were at the forefront of gains in the Nifty IT index, which was among the top performers today.
The Nifty 50 ended flat at 19434.55 points and the Sensex closed 0.1% higher at 65401.92 points.
“Markets continued to witness wild fluctuations due to weak Asian cues, but early optimism in European indices aided a recovery in local markets with the help of buoyancy in IT stocks. However, deflation and demand slowdown in China, coupled with concerns over more rate hikes in developed economies going ahead, has been taking the sheen out of equity markets,” said Shrikant Chouhan, head of retail research at Kotak Securities.
Shares of metal manufacturing companies were among the worst hit. “Globally, steel demand is not that robust and China is also not showing positive signs in terms of demand for metals,” said Narendra Solanki, head of equity research at Anand Rathi Share & Stock Brokers. He added that there was no improvement in demand from European countries as well.
In an interview with Informist last week, Kotak Mahindra Asset Management Co’s Chief Investment Officer–Equity, Harsha Upadhyaya, said he was underweight on metal manufacturers because of the sector’s large linkages to the global economy.
Losses in metal companies were also on account of profit booking, as these stocks had witnessed strong gains during Mar-Jul, said Ameya Ranadive, equity research analyst with Choice Equity. The Nifty Metal gained over 28% during this period.
Vedanta also added to the weakness in stocks of metal-making companies. The stock has declined over 15% in the past nine sessions since it came to light that promoter Twin Star Holdings sold 4.1% stake.
In addition, there are concerns about the company’s ability to repay debt. On Aug 3, S&P Global Ratings had revised the outlook on Vedanta Resources to negative on account of the company’s weak access to funds to refinance its debt.
Adani group companies recorded losses today after Deloitte Haskins & Sells LLP quit as auditor of Adani Ports and Special Economic Zone over differences with the company management regarding certain transactions that were also flagged in a report by US-based short seller Hindenburg Research.
“Such developments are never welcomed by market participants. Post Hindenburg reports, Deloitte wanted to have a detailed forensic group audit and due to non-cooperation and delay, Deloitte decided to get down as statutory auditor to Adani firm which later appointed MSKA & Associates as its new auditor,” said Prashanth Tapse, senior vice president of research at Mehta Equities.
Tapse said Mehta Equities remains neutral to negative on Adani group stocks. Tapse sees 762 rupees as a crucial support for Adani Ports and said that below this level the stock would see more selling pressure and could even test 700-rupee-level in the worst-case scenario. Shares of Adani Ports fell 3.5% today to hit a fresh one-week low of 771.10 rupees. The stock closed 1.7% lower at 787.15 points.
Adani Enterprises closed 3.3% lower at 2,456 rupees and was the worst hit stock on Nifty 50 today. The company had said in an exchange filing on Sunday that the company and two of its subsidiaries are involved in tax-related litigation that carry a possible financial implication of up to 23.79 bln rupees.
Shares of Divi’s Laboratories extended losses during intraday trade after the Nifty 50 company posted a decline in its net profit and revenue for the quarter ended June while also missing the street estimates. Compared to the year-ago period, the company’s net profit slumped 50.1% to 3.45 bln rupees, lower than the average estimate of 4.16 bln rupees. Revenue from operations dropped 21.5% on year to 17.30 bln rupees, lower than the average estimate of 20.49 bln rupees.
The Office of the Economic Adviser released the Wholesale Price Index for July which showed that India’s annual inflation rate based on the index rose to a three-month high of (-)1.36% in July, from a near eight-year low of (-)4.12% in June, mainly on account of a jump in wholesale vegetable prices, in particular tomatoes. In July 2022, WPI inflation was 14.07%.
July is the fourth straight month when WPI was in the deflationary zone. Wholesale inflation in July was higher than the consensus estimate of (-)2.7% in an Informist poll.
“If the food prices continue to trend upward, the deflationary trend could end, and WPI inflation could turn marginally positive in the coming months. Additionally, the uptrend in global crude oil prices, global edible oil prices, and uneven monsoon distribution domestically pose an upside risk to the outlook. Nevertheless, we expect the WPI inflation for this fiscal at a subdued level (in the range of 1-2%) with positive implications for the retail inflation trajectory,” said Rajani Sinha, chief economist at CareEdge.
Investors now eye the July consumer price index, which is due later today. CPI inflation is expected to have risen to 6.5% in July from 4.8% in June because of surging food inflation, particularly vegetables, according to a poll by Informist.
* Of the Nifty 50 stocks, 22 rose, 27 fell, and 1 was unchanged
* Of the Sensex stocks, 15 rose, and 15 fell
* On the BSE, 1,553 stocks rose, 2,175 fell, and 167 were unchanged
* Nifty Media: up 0.9%; Nifty IT: up 0.7%; Nifty Metal: down 2.1%
Sensex: 65401.92, up 79.27 pts or 0.12% Nifty 50: 19434.55, up 6.25 pts or 0.03%
S&P BSE Sensitive Index Nifty 50
Lifetime High: 67619.17 (Jul 20, 2023) : Lifetime High: 19991.85 (Jul 20, 2023)
Record Close High: 67571.90 (Jul 20, 2023) : Record Close High: 19979.15 (Jul 20, 2023)
2023 1st day close: 61167.79 (Jan 2) : 2023 1st day close: 18197.45 (Jan 2)
2023 Closing High: 67571.90 (Jul 20) : 2023 Closing High: 19979.15 (Jul 20)
2023 Closing Low: 59288.35 (Feb 27) : 2023 Closing Low: 17311.80 (Oct 17)
2023 High (intraday): 66064.21 (Jul 13) : 2023 High (intraday): 19567.00 (Jul 13)
2023 Low (intraday): 58699.20 (Jan 30) : 2023 Low (intraday): 17098.55 (Jan 17)
2022 1st day close: 59183.22 (Jan 3) : 2022 1st day close: 17625.70 (Jan 3)
2022 Closing High: 63284.19 (Dec 1) : 2022 Closing High: 18812.50 (Dec 1)
2022 Closing Low: 51360.42 (Jun 17) : 2022 Closing Low: 15293.50 (Jun 17)
2022 High (intraday): 63583.07 (Dec 1) : 2022 High (intraday): 18887.60 (Dec 1)
2022 Low (intraday): 50921.22 (Jun 17) : 2022 Low (intraday): 15183.40 (Jun 17)
2021 Closing High: 61305.95 (Oct 14) : 2021 Closing High: 18338.55 (Oct 14)
2021 Closing Low: 46285.77 (Jan 29) : 2021 Closing Low: 13634.60 (Jan 29)
2021 High (intraday): 61353.25 (Oct 14) : 2021 High (intraday): 18350.75 (Oct 14)
2021 Low (intraday): 46160.46 (Jan 29) : 2021 Low (intraday): 13596.75 (Jan 29)-
2020 Closing High: 47751.33 (Dec 31) : 2020 Closing High: 13981.95 (Dec 30)
2020 Closing Low: 25981.24 (Mar 23) : 2020 Closing Low: 7610.25 (Mar 23)
2020 High (intraday): 47896.97 (Dec 31) : 2020 High (intraday): 14024.85 (Dec 31)
2020 Low (intraday): 25638.90 (Mar 24) : 2020 Low (intraday): 7511.10 (Mar 24)
2019 High (intraday): 41809.96 (Dec 20) : 2019 High (intraday): 12293.90 (Dec 20)
2019 Low (intraday): 35287.16 (Feb 19) : 2019 Low (intraday): 10583.65 (Jan 29)
2018 High (intraday): 38938.91(Aug 28)) : 2018 High(intraday): 11760.20 (Aug 28)
2018 Low (intraday): 32483.8 (Mar 23) : 2018 Low (intraday): 9951.9 (Mar 23)
2017 High (intraday): 34005.37 (Dec 26) : 2017 High(intraday): 10515.10 (Dec 26)
Edited by Avishek Dutta
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