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31-05-2024
Bureau Report + Agencies
NEW DELHI/ BENGALURU: Indian shares fell for a fifth straight session on Thursday, pressured by weakness in global peers, while some investors’ trimmed positions ahead of federal election results.
The NSE Nifty 50 (.NSEI), opens new tab closed down about 1% at 22,488 points, while the S&P BSE Sensex (.BSESN), opens new tab lost 0.9% to 73,885 points. The benchmark indexes saw their worst session in three weeks.
Asian stocks fell 1.3%, tracking the overnight drop on Wall Street on increasing bets that global interest rates would stay higher for longer.
Investors are trimming their positions ahead of the election outcome as a precaution, said Deepak Jasani, head of retail research, HDFC Securities, adding that weakness in global markets was also weighing.
Retail and high net-worth investors trimmed their net long positions in Indian index futures by a sixth from mid-May to May 28, NSE data showed.
Results for India’s general elections will be counted on June 4.
“The market is completely discounting the fact that the current government will stay. However, if the government is not going to make it to the majority, it will be completely catastrophic for the market” said Aishvarya Dadheech, founder and chief investment officer at Fident Asset Management.
Among sectors, the U.S. interest rate-sensitive IT stocks (.NIFTYIT), opens new tab fell 2.2%, seeing its worst intra-day percentage drop since April 16.
The more domestically focussed small-cap (.NIFSMCP100), opens new tab and mid-cap (.NIFMDCP100), opens new tab fell 1.6% and 1.3%, respectively.
Bank stocks (.NSEBANK), opens new tab were lone sectoral gainers, rising 0.4% after S&P Global Ratings raised its outlook on six banks to “positive”.
Among individual stocks, Edelweiss Financial Services (EDEL.NS), opens new tab fell 11.9% after the country’s central bank announced action on two of its units.
Shares of Tata Steel (TISC.NS), opens new tab fell 6% after it reported a fourth-quarter profit fall, while metals index (.NIFTYMET), opens new tab dropped 3% on weak base metals prices.
Marksans Pharma (MARK.NS), opens new tab tanked 14% after quarterly profit fall.
Meanwhile, Hopes of a normal monsoon and a likely thrust from India’s next government to address the stress in the bottom of the market are likely to spur consumption-linked themes for the rest of 2024, a fund manager at Ambit Asset Management said.
“Irrespective of whichever government comes to power after election results on June 4, we are already seeing a trend that is favorable for rural-facing companies or those catering to the bottom end of the market,” Siddharth Bothra, fund manager at the flagship Ambit Coffee Can Fund, said on Wednesday.
“They are ripe for revival.”
A widening wealth gap has led to a “K-shaped” recovery in India’s consumption, with the premium and urban side of the market benefitting from demand for discretionary products like jewelry, while the bottom end of the market has lagged, Bothra says.
“The new government’s likely focus is to take measures to address the stress in the rural and bottom of the market.”
Ambit Asset manages assets worth over 27 billion rupees (about $324 million).
Moreover, the monsoon rains arriving a few days earlier than expected have also boosted the prospects of bumper harvests that could accelerate rural demand and consumption recovery.
