Day: December 21, 2024

Indian investors lost a combined ₹18.5 lakh crore with the BSE Sensex plummeting by 1,176.46 points and the broader NSE Nifty falling by 364.20 points

Indian investors lost a combined ₹18.5 lakh crore after the Indian stock market closed on Friday, December 20, 2024.

The benchmark BSE Sensex plummeted by 1,176.46 points or by 1.49%, closing in at 78,041.59. 28 out of the 30 Sensex stocks closed in the red.

Meanwhile, the broader NSE Nifty fell by 364.20 points or 1.52%, closing at 23,587.50. 45 out of the 50 Nifty stocks closed in the red.

This was the fifth straight day of losses for the Nifty and the week was also the worst one for 2024.

Every single one of the Nifty sectoral indices closed in the red.

This comes at a time when foreign investors offloaded ₹3,597.82 crore worth of equities on Friday, data from the BSE showed.

It also comes when the US Federal Reserve showed a hawkish outlook and expects fewer interest rate cuts in 2025, which led to global markets as well as the Indian market to experience huge levels of sell-offs.

Which companies on the Sensex and Nifty fell the most?

Tech Mahindra Ltd, Mahindra & Mahindra Ltd, and IndusInd Bank Ltd fell the most on the Sensex. Tech Mahindra fell by 3.97%, closing in at ₹1685.20, Mahindra & Mahindra fell by 3.60%, closing in at ₹2,906.40, and IndusInd Bank fell by 3.53%, closing in at ₹930.00 on the BSE.

Tech Mahindra Ltd, Axis Bank Ltd, and IndusInd Bank Ltd were the worst performers on the Nifty. Tech Mahindra fell by 3.90%, closing in at ₹1,685.85, Axis Bank fell by 3.51%, closing in at ₹1,070.00, and IndusInd Bank fell by 3.47%, closing in at ₹930.90 on the NSE.

Which companies on the Sensex and Nifty closed in the green?

Nestle India Ltd and Titan Company Ltd were the only two stocks in the green on the Sensex. Nestle was up by 0.12%, closing at ₹2,163.85, while Titan was up 0.07%, closing at ₹3,357.65.

Meanwhile, Dr. Reddys Laboratories Ltd (up by 1.49%, closing at ₹1,345.30), JSW Steel Ltd (up by 0.59%, closing at ₹931.45), ICICI Bank Ltd (up by 0.40%, closing at ₹1,292.00), Nestle India Ltd (up by 0.21%, closing at ₹2,165.00), and HDFC Life Insurance Company Ltd (up by 0.03%, closing at ₹623.75) were the only five companies that closed in the green on the Nifty.

Which sectors fell the most?

Among the Nifty sectoral indices, Nifty realty fell the most by 3.91%, followed by Nifty Midsmall IT & Telecom at 3.71%, and Nifty Midsmall Financial Services at 3.41%.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

Goldman Sachs, the New York-based investment bank, has outlined its strategic vision for Indian equities in 2025. The firm identifies major growth potential in sectors such as housing, agriculture, defense, tourism, and the rapidly growing segment of affluent consumers, which it believes will drive the next phase of economic expansion in India. 

That said, analysts at Goldman Sachs believe the near-term outlook for Indian equities remains cautious. Weak earnings growth and high valuations are likely to keep the market range-bound over the next three months.  

As such, Goldman Sachs anticipates the Nifty50 index to hit 24,000 (+2 per cent) over the next three months, followed by a back-loaded recovery to a 12-month target of 27,000, fuelled by underlying earnings growth.

“While the MSCI India index has seen an 8 per cent valuation de-rating, it still trades at nearly 23-times forward price-to-earnings (PE), well above the 10-year average and our fair-value estimate of 21-times PE. We forecast MSCI India earnings growth of 12 per cent, 13 per cent, and 16 per cent for CY 2024, 2025, and 2026, respectively—slightly below consensus estimates,” Goldman Sachs said. 

In a detailed note authored by Sunil Koul, Amrita Goel, and a team of 12 other analysts, Goldman Sachs laid out its medium-term outlook for India. The report stressed upon the resilience of ‘quality factors’ during periods of economic slowdown. Historically, companies with strong balance sheets, high earnings visibility, positive earnings-per-share (EPS) revisions, and low volatility (low beta stocks) have outperformed during challenging times.

“Our preferred medium-term themes include housing, agriculture, defense, tourism, and affluent India,” analysts at Goldman Sachs said. These sectors align with the structural trends reshaping India’s economy, from urbanisation and agricultural reforms to rising national security needs and a booming middle class eager to travel and invest in premium products. 

The analysts also flagged a selection of 16 ‘oversold’ stocks, each witnessing a correction of over 20 per cent. The stocks include Trent Limited, InterGlobe Aviation, Shriram Finance, Havells India, Cholamandalam Investment, IndusInd Bank, Aurobindo Pharma, Phoenix Mills, AU Small Finance Bank, L&T Finance, Emami, Star Health & Allied Insurance, Crompton Greaves Consumer Consumer, Kajaria Ceramics, C E Info Systems, and CreditAccess Grameen. These, they suggest, represent major buying opportunities in the current market.

Moreover, Goldman Sachs remains tactically neutral on Indian equities within its Asia/EM 2025 allocations but is strategically leaning towards select domestic and export-oriented sectors. Among domestic sectors, the focus is on autos, telecom, insurance, real estate, and internet companies, all of which demonstrate higher earnings visibility.  

On the export front, the firm has upgraded the IT sector to overweight (OW) and the pharmaceutical sector to marketweight (MW), citing benefits from stable or improving global demand, earnings-per-share (EPS) tailwinds driven by a weaker Rupee (INR), and their defensive characteristics.  

Although India’s medium-term growth outlook remains robust, cyclical challenges and high valuations call for a measured approach in the near term. By concentrating on carefully chosen domestic and export-oriented sectors, Goldman Sachs advises investors to navigate the current market dynamics strategically while positioning themselves to capitalise on long-term growth potential.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

Taming food prices, which have been driving the headline inflation rate, through interest rates has a limited impact, said two external members of the Reserve Bank of India’s (RBI’s) Monetary Policy Committee in the December policy review.

 According to the minutes of the meeting, both these members, Nagesh Kumar and Ram Singh, had voted for a policy repo rate cut of 25 basis points. 

The Monetary Policy Committee decided to keep the rate unchanged at 6.50 per cent with a 4-2 majority in favour of the decision while all members supported the motion to change the stance of the policy to “neutral” from “withdrawal of accommodation”.

“The extent of the slowdown [in growth] is serious enough to warrant policy attention,” said Kumar, referring to 5.4 per cent growth in gross domestic product in July-September, much below the RBI’s forecast of 7 per cent. 

 Observing that the growth slowdown largely reflected the weakness of the industrial sector, Kumar said this had resulted in employment sentiment deteriorating in Q2.

Kumar, who had voted for a rate cut in the October policy too, said the inflation spike was largely due to food prices, which have a high weighting in the index. “Monetary policy, being a demand management tool, has limitations in addressing inflation largely driven by a supply side shock driving up vegetable prices,” Kumar said, while adding food prices should be easing further in the coming months.

Singh, who voted for a rate cut for the first time, also expects food prices to ease in the fourth quarter. 

 “Interest rates have little bearing on volatility in prices of fruit and vegetables prices,” Singh said. 

 “The elevated interest rates during the last 10 quarters had no significant effect on price volatility.” 

Commenting that the difference between the core inflation rate (<4 per cent) and the policy rate (at 6.5 per cent) has been more than 2.5 percentage points for over a year now, Singh said “this makes for a restrictive monetary regime”. 

“A rate cut will reduce the cost of doing business and increase the opportunity cost of holding on to cash for firms and companies,” Singh added.

The third external member, Saugata Bhattacharya, who voted for the status quo on rates, treaded a cautious path amid slowing growth and elevated inflation. 

He, however, expected food prices to remain elevated.

 “Although largely the result of high prices of a few vegetables [October consumer price index inflation of 6.2 per cent], other food components are also becoming more expensive. Preliminary data suggest that food price inflation for November, while moderating, is expected to remain elevated,” Bhattacharya said. He also noted the core inflation rate was creeping up.

 “The prevailing economic conditions bring to mind a phrase a former RBI governor had invoked in a different context: ‘Festina Lente’, Latin for ‘make haste slowly’,” he said.

December was the second policy review meeting for the external members, who have a four-year term.

 Among internal members, Rajiv Ranjan said in accordance with their assessment, the growth-inflation trend was to reverse in the near future.

 Deputy Governor Michael Patra expressed concern on the uptick in the core inflation rate as he remained guarded on the inflation outlook. 

 “What is worrying is that core inflation has edged up by 70 basis points from its July low. There are early signs of second order effects or spillovers of high primary food prices – following the surge in prices of edible oils, inflation in respect of processed food prices is starting to see an uptick,” Patra said.

He, however, said the expected winter easing in food prices might be the turning point in inflation.

 Shaktikanta Das, who chaired his last Monetary Policy Committee meeting as governor, iterated his optimism on economic growth. 

“The Indian economy remains resilient, notwithstanding the lower GDP data for Q2 of 2024-25,” Das said. 

He also noted the sequential uptick on core inflation during September-October. 

“In my overall assessment, the gains achieved so far in the broad direction of disinflation need to be preserved, while closely monitoring the evolving outlook of both inflation and growth,” Das said.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com