Market Wrap: Sensex, Nifty end slightly lower in lacklustre trade; Nestle, Tata Steel gain

Benchmark share indices ended marginally lower in lacklustre trade on Tuesday amid weak global cues. Sensex closed at 65,945.47, down 78 points, while Nifty 50 ended at 19,665, down 0.05%. Smallcap stocks were the outperformers among broader market indices. 

Among sectoral indices auto, FMCG, realty and metals clocked some gains, while banks & financials and IT dragged. Tata Steel, Nestle India, Eicher Motors and Bajaj Auto were the best gainers, while Infy, Asian Paints, Cipla and Tech Mahindra lagged. 

Asian markets closed in the red, while European stocks also fell with London, Frankfurt and Paris trading lower.

Brokerage firm Nirmal Bang is cautious about the IT sector and cut the FY25 revenue estimates for almost all its coverage as it expects a shallow US recession in 2024.

"We advocate that investors use the ‘delayed/no landing’ rally seen since October 2022 to pare positions if overweight, especially in the tier-2 set," Nirmal Bang said in a note on September 26.

"We reiterate our ‘sell’ rating on almost our entire IT coverage universe, except Tech Mahindra. We have upgraded Tech Mahindra from a ‘sell’ to an ‘accumulate’ as we feel that margin expansion in FY26 may surprise on the upside under new management. We have tweaked our estimates and target prices from the ones given post-Q1FY24 results. The key change we have made is to cut FY25 revenue estimates for almost all our coverage as we now expect a shallow US recession to be a 2024 event," said Nirmal Bang.

Shivkumar Pandey, chief information security officer, has tendered his resignation in order to pursue another opportunity, BSE said in an exchange filing. Nayan Mehta, chief – special projects resigned due to personal and health reasons.

Stock markets around the world plunged on Tuesday, as investors grew increasingly fearful of the US Federal Reserve's aggressive approach to monetary policy. Asian markets closed in the red with Japan and Hong Kong crashing over 1% each. European stocks also fell with London, Frankfurt and Paris also trading lower.

Gold has been grappling with bearish pressure, primarily due to uncertainty surrounding inflation and interest rates. In a late-Monday address, Minneapolis Fed President Neel Kashkari hinted at a potential rate hike before the end of 2023 and lowered expectations for rate cuts next year. Total holdings of Gold ETFs have also declined in recent sessions, now hovering around levels last seen in April 2020. Market participants have shifted their attention and positions toward the Dollar index and US Treasuries, thereby exerting downward pressure on the yellow metal.

Today, the market will take some cues from upcoming reports on US Consumer confidence index, New Home sales and Richmond Manufacturing Index, while the main focus remains on upcoming statements from FED Members during the week.

Participation in gold declined during the last trading session due to a decrease in prices. Overall, participation continues to hover at lower levels, potentially setting the stage for a gold rally when participation increases. We believe that gold will consolidate at its current prices; nonetheless, it remains a favourable investment opportunity at these levels.

Currently we are looking at a support level at ₹58,300. However, a break below this support could open gold for a further downside. On the upside, gold may witness a rally up to ₹59,500 levels.

Apar plans to raise further capital through instruments such as convertible preference shares, non-convertible debt instruments along with warrants, fully convertible debentures, partly convertible debentures, and/or any other securities convertible into equity shares (including warrants or otherwise), global depository receipts, American depository receipts, foreign currency convertible bonds, through public and/or private offerings and/or by way of qualified institutions placement, and / or preferential allotment.

We await the further details regarding quantum of amount to be raised, utilisation of funds and likely dillution in promoter shareholding dillution. Current Promoter holding 60.64%.

View: We believe capital raise can be utilised for further capex plan, which can be over and above the current capex plan of ~Rs3.5bn. The stock is trading at PE of 37.3x/30x FY24/25E. We have accumulate rating on stock with a price target of ₹5,418.

The finance ministry has brought out final valuation rules applicable to foreign investments into unlisted shares in India to determine whether it entails a premium that is liable to any levy under angel tax provisions. (Full report)

BEW Engineering jumped on the NSE after two firms, reportedly backed by renowned investor Ashish Kacholia, bought 50,000 shares on Monday in a bulk transaction. 

"We visited Steel Strip (SSWL) plants in Mehsana, Gujarat. The company along with Kalink Co. Ltd. (one of the top 7 alloy wheel manufacturers in the world) had entered into a strategic alliance in Sept-15 for setting up this plant. The plant became operational in 2019 and currently has ~3mn alloy wheel capacity expected to expand to 4.8mn. Management highlighted clear strategy of 1) diversifying product portfolio 2) expanding export market and 3) shifting its sales mix towards high-margin segments. It is also working on wheels for EVs and majority of its business is agnostic to powertrains. SSWL remains ahead on technology front, focused on weight reduction of products to offer superior quality and aims to shift its sales mix towards high margin segments like alloy wheels and exports.

We believe steady core business and ramp-up of new businesses will help expand revenue and margins with revenue growth expectation of ~9-10% on blended basis over next 5 years and help diversify its mix. SSWL aims to grow volumes by 12-16% in FY24, with revenue of ~Rs.45bn-47bn in FY24 v/s Rs.40bn in FY23 with export contributing Rs.5bn-6bn. The stock is currently trading at a valuation of ~17x FY24E and it could see EPS growth of 16-20% based on management volume and EBITDA guidance, in our view. Not Rated."

Oil prices fell on Tuesday as investors worried that higher interest rates would crimp fuel demand. Brent crude futures were down 87 cents at $92.42 a barrel. US West Texas Intermediate crude futures were trading 87 cents lower at $88.81.

Here is a close look at the top smallcap picks of India's biggest insurer Life Insurance Corp by Equitymaster.

The company has received letters of acceptance for four new projects worth ₹482.37 crore. The projects include road and drain works for CBR Project of CPCL at Nagapattinam, Tamilnadu, and provision of civil works and allied services for engine test facility for GRTE at Rajankute, Bengaluru, Karnataka.

Arm Sintex BAPL has signed a Memorandum of Understanding with Telangana government to set up a manufacturing unit in the state with an investment of up to ₹350 crore.

Moody's Investors Service on Monday upgraded the corporate family rating of Tata Steel from ‘Ba1’ to ‘Baa3’ and changed its outlook to ‘stable’ from ‘positive’.

The government will request a top advisory panel to look into the need for a special regulatory regime for large unlisted companies, a person aware of the plans said. The idea is to ensure closer oversight of businesses that have grown in size but enjoy a lighter regulatory regime since they remain in the class of unlisted private limited companies. (Full report)

IT services firm Coforge Ltd and Newgen Software have teamed up to deliver new solutions for the insurance industry. The partners will use the low-code platform to deliver solutions in insurance lifecycle management including customer communications management and document and content management. (Full report)

A stock can be placed under additional surveillance measures in case it falls under a certain basis including high variation between high and low prices and variation in volumes as compared to the monthly average. Such shares also attract higher margin requirements.

Oil prices fell in early trade on Tuesday amid concerns that fuel demand will be crimped by major central banks holding interest rates higher for longer, even with supply expected to be tight.

Brent crude futures were down 11 cents at $93.18 a barrel and US West Texas Intermediate crude futures were trading 1 cent lower at $89.67.

Nifty today has crucial near-term support at 19,600 to 19,550. A bounce back on Dalal Street can be expected till Nifty sustains above this crucial support zone. On stocks to buy today, Vaishali Parekh recommended three intraday stocks for today and those day trading stocks are Shriram Finance, TVS Motor and RailTel.

On outlook for Nifty 50 index during Tuesday deals, Parekh said, "Nifty maintained the support near 19,600 zone during the intraday session with volatility witnessed to recover to 19,730 levels and ending the day on a flat note. The index has got the crucial near-term support zone near 19,550 levels which is where the significant 50EMA lies and needs to be sustained."

Tata Steel, Wipro, Strides Pharma, HDFC AMC, Sheela Foam, Reliance, Welspun Corp are the top stocks in focus today. Balrampur Chini Mills, Canara Bank, Granules India, Hindustan Copper and Indiabulls Housing Finance are the companies placed under futures & options ban on NSE for Tuesday

Asian stocks fell on Tuesday as investors recalibrated their interest rate expectations. US stocks snapped a four-day losing streak on Monday, but gains were limited by worries about a possible US government shutdown and lofty interest rates.