Midday Mood: Banks and L&T top drags as benchmarks retreat ahead of the Fed's announcement

 Midday Mood: Banks and L&T top drags as benchmarks retreat ahead of the Fed's announcement

Sector-wise, real estate, telecom, energy, and IT had increases while metal, banks, commodities, industrials, utilities, power, and capital goods saw losses.

On the BSE, a total of 1,871 stocks advanced, 1,532 declined, and 159 counters were unchanged. On November 1, investors stayed away from the markets in the afternoon session in anticipation of the US Federal Reserve's policy decision later that day, and lackluster macroeconomic data added to the pressure.

According to statistics published on November 1, India's manufacturing activity dropped to an eight-month low of 55.5 in October from an S&P Global Purchasing Managers’ Index (PMI) of 57.5 a month earlier due to cost pressure and dampened demand for some items.

October growth slowed as a result of poor demand at certain factories and competition. Even though there was an additional rise in new orders, the growth rate was at its slowest point in a year, particularly affecting consumer products.

The wider NSE Nifty fell 29.70 points, or 0.16 percent, to 19,049.90 at 12:01 pm, while the 30-pack BSE Sensex was trading 112.50 points, or 0.18 percent, down at 63,762.43.

On the BSE, 1,871 equities increased, 1,532 fell, and 159 counters did not move.

Sector-wise, real estate, telecom, energy, and IT had increases while metal, banks, commodities, industrials, utilities, power, and capital goods saw losses.

While the small-cap gauge crept up 0.34 percent, the BSE mid-cap index fell 0.10 percent.

Foreign institutional investors (FIIs) continued their selling binge on October 31, offloading Indian equities valued at a net Rs 696.02 crore, while DIIs purchased shares worth Rs 340.25 crore.

MC Pro Inside Edge | Catch-22, value signaling, Desi Soros, King Tring, and a fund manager's trip

Among the worst losses in the Sensex pack, L&T fell 1.30 percent as profit-booking took hold of the company after robust Q2 earnings.

During the second quarter of the fiscal year 2023–24, the engineering giant reported a 45 percent increase in net profit to Rs 3,223 crore. Consolidated sales increased by 19 percent to Rs 51,024 crore from Rs 42,763 crore in the previous year.

In response to the findings, analysts increased their target prices and projections for L&T.

The firm was given a 'buy' recommendation by Prabhudas Lilladher analysts, who upped their target price from Rs 3,302 to Rs 3,437. They claimed that L&T had excellent long-term prospects because of its superior order conversion in the home market, strong traction in orders for hydrocarbon and renewable energy coming from overseas markets like Saudi Arabia, and an anticipated increase in private capital expenditure in the domestic market.

Similarly, Bharti Airtel fell 1% despite brokerage analysts being delighted by subscriber growth and India mobile services performance in the telecom giant's Q2 FY24 financial reports. Year over year, revenue and EBITDA growth exceeded expectations, while net profit decreased primarily as a result of unusual items.

The fiscal second quarter sales of Bharti Airtel increased 7% year over year to Rs 37,044 crore, with a 10% year over year rise in its India division to Rs 26,995 crore. To Rs 19,665 crore, earnings before interest, taxes, depreciation, and amortization increased. The period's EBITDA margin increased 176 basis points year over year to 53.1%. At Rs 1,341 crore, the net profit for the quarter decreased 37.5% year over year.

The other notable underperformers were banking equities, which had declines of up to 1.06 percent at Axis Bank, Kotak Mahindra Bank, HDFC Bank, ICICI Bank, and IndusInd Bank.

Reliance Industries, a dominant player in the industry, led the list of gainers, rising more than 1 percent, and was followed by M&M, SBI, Bajaj Finance, Sun Pharma, and Wipro.

Tata Consumer was among the top gainers on Nifty50 as the FMCG company announced an overall net profit of Rs 359.18 crore for the quarter ended September, topping the street’s expectations as price rises improved margins.

Morgan Stanley maintained its ‘overweight’ recommendation on Tata Consumer shares, with a target price of Rs 933 each, saying the results were better than its projections. This is an increase of 3.7 percent above the previous closing price of Rs 900.

As investors anticipated the US Federal Reserve's policy announcement, Asian markets were divided globally. Meanwhile, the yen fell to one-year lows vs the US dollar, increasing the likelihood that Tokyo will step in.

Although it is generally anticipated that the Federal Reserve will keep policy rates unchanged, attention will be paid to the signals that Chair Jerome Powell and the other members of the Federal Open Market Committee send out.

After recording losses in three consecutive months, MSCI's broadest index of Asia-Pacific equities outside of Japan fell 0.13 percent to begin November on a somber note. Japan's Nikkei Index increased by 2%.

Following an unexpected decline in industrial activity in October, which coincided with a depressing official manufacturing survey the day before, China's shares fell 0.15 percent, casting doubt on the nation's precarious economic recovery at the beginning of the fourth quarter.

The Bank of Japan's decision to further relax its control over long-term interest rates by modifying its bond yield control policy on Tuesday caused the yen to plummet.

US Treasury rates continued to rise; the yield on 10-year notes was 4.929%, up 5.4 basis points. The 30-year Treasury bond's yield increased to 5.090 percent, up 6.6 basis points.

"The level of uncertainty surrounding the West Asian situation is at an all-time high as the ground battle in Gaza continues to escalate. As of right now, we have no idea how, when, or what will happen after this conflict ends. Therefore, investors had to stick to a cautious approach, according to Geojit Financial Services Chief Investment Strategist V K Vijayakumar.

It's critical to realize that the US bond rate increase is having a greater worldwide influence on equities markets than the Israel-Hamas war. Stock markets, especially those in developing economies, will continue to face significant challenges due to the US 10-year bond rate, which is now around 4.9%. It's probable that FIIs' persistent selling will continue to pressure markets. For India, the decline in Brent crude is quite encouraging. The announcement will have a good impact for the aviation, paint, and tire stocks, he said.

The trends in high-quality big caps, such as Maruti, ICICI Bank, HDFC Bank, RIL, ITC, and L&T, which have released positive Q2 results, may be of interest to investors. Since these businesses have strong profits visibility, when normality comes, there will be significant institutional buying. Vijayakumar went on to say