In addition, the diminishing hopes of an early rate hike by the US Fed, geopolitical tensions in the red sea and rising US bond yields also dampened investor sentiment. This led them to book profits amid a significant rally in the Indian stock market in CY23, causing shares to trade at expensive valuations. Foreign portfolio funds (FPIs) pulled back ₹12,140 crore of Indian stocks this week alone.
Also Read: FII selling in Indian stock market may continue despite ₹27,000 crore outflow in Jan so far, analysts say; this is why
Inferior results
The Q3 FY23 earnings season has, so far, failed to provide the robust momentum needed to boost investor sentiment. Banks are grappling with tight credit costs, adversely affecting their Net Interest Margins (NIMs). Despite strong performance in other metrics such as loan growth and asset quality, the decline in NIMs has raised concerns among investors, given its significance in assessing a bank’s profitability and financial health. Analysts expect that the NIMs are more likely to remain under pressure for 2-3 quarters.
Further, major IT companies reported mixed earnings. This scenario has added to the cautious approach among investors, affecting overall market dynamics. Further, FMCG Major Hindustan Unilever (HUL) posted weak numbers for the quarter ending December, propelling its stock to touch an 18-month low during Tuesday’s trading session.
Additionally, concerns about rising oil prices and China reportedly looking to inject 2 trillion yuan into its declining stock market further weighed on investors. This situation is expected to affect FPI inflows, especially considering the already elevated valuations of the Indian market.
Also Read: Oil prices rise 2% driven by Red Sea tensions, US crude stocks; Brent reaches $81/bbl
27 stocks ended the week in the red
Amidst this backdrop, Nifty 50 ended the week in negative territory, registering a decline of over 1%, settling at 21,352 points. Among the index components, 27 ended the week in the red, with Asian Paints leading the decline with a fall of 6.8%. Closely followed by IndusInd Bank, Axis Bank, HDFC Life Insurance Company, HUL, HDFC Bank, Divi’s Laboratories, Wipro, Bajaj Finance, State Bank of India, Tech Mahindra, Tata Consultancy Services, and ITC, all experiencing falls between 1.5% and 6.5% .
On the positive side, the shares of Bajaj Auto touched a new all-time high of ₹7,625 per, ending the week with a gain of 7.3%. Bharti Airtel’s stock also hit a record high ₹1,200 a piece, propelling the company’s market capitalization close to the ₹7 lakh crore mark. Power stocks, including NTPC and Power Grid Corporation, also touched new highs at ₹325 and ₹248, respectively.
Also read: HDFC Bank, ICICI, Axis, Kotak Bank shares volatile as Q3 results reflect margin pressures; this is why banks fail
Commenting on the market performance, Vinod Nair, Head of Research at Geoit Financial Servicessaid, “The broader market is unable to hold gains due to high valuations, underperforming results and continued geopolitical tension in the Middle East, followed by F&O expirations, which are weighing on the market. Going forward, global market factors such as policy rate decisions. by major countries will impact the market, and markets are likely to witness shares of specific stocks during the ongoing earnings season.”
Disclaimer: The opinions and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 26 Jan 2024, 13:31 IST