Indian equity indices traded rose on Tuesday ahead of crucial U.S. inflation data, with easing domestic inflation and hopes of potential inflows after the addition of five Indian stocks into a key MSCI index aiding sentiment.
The BSE Sensex was trading 462 points lower at 71,535. Nifty50 was trading at 21,739, down 123 points at around 10.56 am.
India’s retail inflation fell to a three-month low of 5.10% in January, as prices of some food items rose at a slower pace, data showed on Monday.
Industrial output rose at a faster-than-expected pace of 3.8% year-on-year in December, led by manufacturing, signalling strength in macroeconomic fundamentals.
Meanwhile, index provider MSCI raised India’s weightage in its Global Standard (Emerging Markets) index to a historic high of 18.2% following its February review, adding five stocks.
From the Sensex pack, NTPC, M&M, ICICI Bank, Reliance Industries, Tata Motors, and ITC opened with gains, while JSW Steel, Power Grid, Tata Steel, UltraTech Cement, and Wipro opened cuts.
Among individual stocks, SAIL traded over 5% lower after the company posted a drop in third-quarter profit as higher imports dented sales volume.
Meanwhile, Coal India rose nearly 3% after the company reported a higher-than-expected third-quarter profit on higher production. Coal India reported a 17% growth in its consolidated net profit to Rs 9,069 crore in Q3 FY24 as against Rs 7,755 crore a year ago.
Sector-wise, Nifty Metal fell 3.2%, dragged by Jindal Stainless, Hindalco, and SAIL. Nifty Auto, IT, Media, PSU Bank, and Realty also opened in the red.
Experts Take
“An important ongoing trend in the market is the weakness in the broader market with sharp cuts in many mid and small caps. Many such stocks driven up by speculative buying without consideration for the fundamentals are correcting. This trend is likely to continue since many such stocks are excessively valued,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
“The explosive growth in the number of demat accounts and the newbies chasing mid and small caps influenced by recency bias have contributed to this froth in the broader market. A correction in this segment is inevitable and desirable. Correction will give opportunities to buy fairly valued stocks in this segment like PSU Banks,” Vijayakumar added.
Deven Mehata, Research Analyst at Choice Broking, said, “Nifty can find support at 21,550 followed by 21,500 and 21,400. On the higher side, 21,750 can be an immediate resistance, followed by 21,800 and 21,900.”
Asian Markets
Asian stocks inched higher on Tuesday ahead of a key U.S. inflation report that could help shape the Federal Reserve’s rates outlook and determine the timing of interest rate cuts.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.15% higher in early trading. The index is down 3% so far in the year.
Japan’s Nikkei on the other hand has carried on from last year and is up 12% for the year. On Tuesday, the index rose 1.7% to hit a fresh 34-year high on the back of a weak yen which is nearing the closely-watched 150 per dollar level.
FII/DII Tracker
Both foreign institutional investors (FIIs) and domestic institutional investors (DIIs) were net buyers of Indian equities on Monday. FIIs bought Indian shares worth Rs 127 crore on a net basis on Monday, while DIIs purchased Rs 1,712 crore of shares.
Crude Oil
Oil prices were little changed on Tuesday for a second straight day as uncertainty about the pace of potential U.S. interest rate cuts and the impact on fuel demand offset worries about Middle East tensions that could disrupt supply.
Brent futures edged 6 cents higher to $82.07 a barrel. U.S. West Texas Intermediate (WTI) crude rose 11 cents to $77.03 a barrel.
Currency Watch
The Indian rupee was flat 11 at $83 against the US dollar in early trade. The dollar index, which tracks the movement of the greenback against a basket of six major world currencies, surged 0.08% to 104.25 level.
(With inputs from agencies)
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
