Pedestrians walk past an electronic ticker board displaying stock figures for Tata Steel Ltd., from left, Tata Consultancy Services Ltd. (TCS), and Wipro Ltd. at the Bombay Stock Exchange (BSE), center, in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Mixed Day for India Stocks as Investors Weigh Earnings, Fed Meet

(Bloomberg) -- Indian equities fluctuated between gains and losses ahead of the Fed meeting and a national budget later this week.

The benchmark S&P BSE Sensex was little changed at the 3:30 p.m. close in Mumbai, trading between a rise of 0.7 percent and a decline of 0.3 percent in the day. The NSE Nifty 50 Index also ended flat, swinging between a high of 0.5 percent and a low of 0.4 percent.

Of the 24 Nifty 50 Index companies that have announced results for the October to December period so far, 15 have either met or exceeded analyst estimates. Still, a gauge measuring overall activity -- or “animal spirits” -- moved two notches lower in December from a month ago, underpinning a view that the pace of nation’s economic expansion has slowed. Investors are also awaiting the U.S. rate decision overnight, India’s interim federal budget on Friday and the Reserve Bank of India’s policy announcement on Feb. 7.

Mixed Day for India Stocks as Investors Weigh Earnings, Fed Meet

Strategist’s View

  • “The government’s fiscal deficit target in the upcoming budget and its quality will be important for investors,” said Girish Pai, head of institutional equity research at Nirmal Bang Equities Pvt in Mumbai. “Investors can digest a figure of as much as 3.5 percent.”
  • “Earnings are OK, as the comparative numbers from a year earlier weren’t great; investors are expecting low-teen percentage growth in earnings for Nifty companies this fiscal year and then a pick up to mid-to-high teens next year,” Pai said.
    • Global growth, U.S.-China trade negotiations and their impact on businesses are “more of a worry to me.”
  • The recent weakness in the broader market refuses to die down, indicating possibility of sharp volatility in key indexes, HDFC Securities Ltd. said in an investor note Tuesday.
    • Raising some cash out of current equity holdings may be a good idea, to deploy back when “the clouds on the horizon are getting dispersed and valuations become even more attractive.”

The Numbers

  • Twenty-six of the 50 Nifty shares and 15 of the 31 Sensex stocks declined.
  • Eight of the 19 sector indexes compiled by BSE Ltd. declined, led by a gauge of telecom stocks. The S&P BSE Metal Index rose the most, gaining nearly 2 percent.
  • Bajaj Auto Ltd. dropped 2.7 percent, the most among Sensex members. The bike maker’s operating profit margin for December quarter narrowed from a year earlier even as it reported a higher-than-expected net income.
  • ICICI Bank Ltd., which will report earnings later Wednesday, climbed 5.9 percent, the steepest gains among Sensex and Nifty members. Rival Axis Bank Ltd. rose 4.6 percent to a record after its third-quarter net income topped estimates.
  • Godrej Consumer Products Ltd. slumped 7.7 percent, the most in nine years after it reported a lower-than-estimated net income and sales for October to December. Godrej’s shares dropped the most on S&P BSE 200 and S&P BSE 500 indexes.

Analyst Notes/Market-Related Stories

  • Hero MotoCorp Downgraded to Neutral at Nomura; PT 2,732 Rupees
  • Axis Bank Upgraded to Outperform at Credit Suisse; PT 780 Rupees
  • Ceat Downgraded to Reduce at Nomura; PT 1,015 Rupees

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