Indian shares logged gains on Friday, narrowing their weekly losses, as a bigger-than-expected drop in U.S. unemployment claims allayed fears of a recession in the world’s top economy. File.
| Photo Credit: ANI

Indian shares are likely to open flat on Monday (August 12, 2024), with the Securities and Exchange Board of India (SEBI) asking investors to remain calm following short-seller Hindenburg Research’s allegations against the head of the country’s markets regulator.

The Gift Nifty was trading at 24,362.5, as of 07:47 a.m IST, indicating that the benchmark Nifty 50 will open near its Friday’s close of 24,367.5.

Over the weekend, U.S.-based Hindenburg alleged that Madhabi Puri Buch, the head of SEBI, previously held investments in offshore funds also used by the Adani Group.

Ms. Buch denied the allegations and said all investments had been duly disclosed.

In a separate statement, the markets regulator asked investors to remain calm and exercise due diligence before reacting to the report.

The Association of Mutual Funds in India — a lobby for mutual funds — also stepped in to assure investors, saying India’s financial system is secure and transparent.

These allegations do not have any implications for corporate earnings or macro fundamentals of Indian markets. At best, they may have a minor, perception-driven impact, said two analysts, on a likely Street reaction to the U.S. short-seller’s allegations.

Indian shares logged gains on Friday, narrowing their weekly losses, as a bigger-than-expected drop in U.S. unemployment claims allayed fears of a recession in the world’s top economy that sparked a slide in global stocks earlier in the week.

Foreign institutional investors (FIIs) snapped selling streak on Friday, buying a net ₹4.07 billion ($50 million) of shares. FIIs had offloaded shares worth ₹228.57 billion in the previous five sessions.

Asian markets opened higher, with the MSCI Asia ex-Japan index adding 0.5%. Investors await U.S. consumer prices data on Wednesday to gauge the health of the U.S. economy. Wall Street equities closed higher on Friday.

STOCKS TO WATCH

** Adani Group companies such as Adani Enterprises and Adani Ports will be in focus after Hindenburg Research alleged SEBI chief had investments in offshore funds, also used by the group.

** Honasa Consumer reports a rise in consolidated net profit in June quarter.

** Amara Raja Energy & Mobility’s unit signs a deal with Piaggio Vehicles, Indian subsidiary of Italy’s Piaggio Group.

In the biggest single-day fall in four years, benchmark stock indices Sensex and Nifty plunged by nearly 6 per cent on Tuesday as vote counting trends showed the BJP may not have a clear majority in the Lok Sabha polls.

Reversing its Monday’s sharp gains of over 3 per cent, the 30-share BSE Sensex nosedived 4,389.73 points or 5.74 per cent to close at a more than two-month low of 72,079.05. In the day trade, the barometer tanked 6,234.35 points or 8.15 per cent to hit a nearly five-month low level of 70,234.43.

The NSE Nifty tumbled 1,982.45 points or 8.52 per cent to 21,281.45 during the day. Later, it ended at 21,884.50, a sharp decline of 1,379.40 points or 5.93 per cent. Sensex and Nifty had previously declined by around 13 per cent on March 23, 2020, when lockdown was imposed due to the COVID-19 pandemic.

Heavy profit booking in PSUs, public banks, power, utilities, energy, oil and gas, and capital goods shares dragged the markets into the deep negative.

“The unexpected outcome of the general election sparked a wave of fear selling in the domestic market, reversing the recent substantial rally. Despite this, the market maintains its expectation of stability within the coalition, led by BJP as the major election winner, thereby mitigating substantial downside in the medium term.

“This is likely to lead to a major shift in political policy with a focus on social economics, which will have a positive effect on the rural economy,” said Vinod Nair, Head of Research, Geojit Financial Services.

Vote counting trends showed that the BJP was poised to be the single largest party but could be well short of an absolute majority, leaving it dependent on its NDA partners to form government.

When the Narendra Modi government came to power on May 16, 2014, Sensex had rallied 261.14 points or 0.90 per cent to settle at 24,121.74, and Nifty jumped 79.85 points or 1.12 per cent to 7,203. The BSE benchmark had hit the 25,000-mark in intra-day trade on that day.

On May 23, 2019, the Sensex declined 298.82 points or 0.76 per cent to settle at 38,811.39, while the Nifty ended 80.85 points or 0.69 per cent lower at 11,657.05. The BSE benchmark had hit the 40,000-mark for the first time ever, while the Nifty breached the 12,000-level on that day.

Among the 30 Sensex companies, NTPC plunged over 15 per cent, while State Bank of India tanked more than 14 per cent, Larsen & Toubro tumbled over 12 per cent and Power Grid dived more than 12 per cent. Tata Steel, IndusInd Bank, Bharti Airtel, ICICI Bank, Axis Bank, Reliance Industries and JSW Steel were the other big laggards.

On the other hand, Hindustan Unilever jumped 6 per cent while Nestle climbed 3 per cent. Tata Consultancy Services, Asian Paints and Sun Pharma also emerged as the gainers.

All the sectoral indices, except for FMCG, closed in the red.

Adani group shares also declined. Adani Ports & SEZ tanked over 21 per cent, Adani Enterprises by nearly 20 per cent, Adani Power by 17 per cent, Adani Energy Solutions by 20 per cent and Adani Green Energy by over 19 per cent.

“Markets have reacted sharply to the initial trends of the NDA leading on around 290 seats which look way behind the exit polls which were projecting around 350-370 seats. With the NDA still looking to form a government, though with the important support of coalition partners, markets look jittery about the prospects of strong decision making.

“Markets believe that the reformistic approach, which was a hallmark of the previous two terms, might take a backseat in the third term. However, our sense is that it is still early to jump to conclusions and should ideally wait for a clearer picture,” said Manish Chowdhury, Head of Research, StoxBox.

In the broader market, the BSE midcap gauge tanked 8.07 per cent and smallcap index plunged 6.79 per cent.

Among the indices, utilities dived 14.40 per cent, power tumbled 14.25 per cent, oil and gas by 13.07 per cent, services by 12.65 per cent, capital goods by 12.06 per cent, energy by 11.62 per cent and metal by 9.65 per cent.

As many as 3,349 stocks declined while 488 advanced and 97 remained unchanged on the BSE. Also, 292 stocks hit their 52-week low, while 139 reached their one-year peak.

On the NSE, 2,438 stocks declined while 242 advanced and 70 were unchanged. The number of stocks to hit a 52-week high stood at 83 while 271 stocks fell to their 52-week low.

In Asian markets, Seoul and Tokyo settled lower while Shanghai and Hong Kong ended with gains. European markets were trading lower. US markets ended on a mixed note on Monday. Global oil benchmark Brent crude declined 1.88 per cent to USD 76.89 a barrel.

Markets jumped sharply on Monday after exit polls predicted a massive win for the BJP-led NDA in the Lok Sabha polls. The BSE benchmark soared by 2,507.47 points or 3.39 per cent to settle at a new closing peak of 76,468.78 on Monday, marking its biggest single-day gain in three years. The NSE Nifty climbed 733.20 points or 3.25 per cent to finish at 23,263.90.