Stock indices hit 2-month low, but these 44 shares at record high

Bears don’t seem to be ready to give up their hold easily as they put the benchmark indices under pressure for the seventh consecutive session on September 29, with the key indices hitting a two-month low. However, about 44 stocks touched record highs.

Market participants may be cautious ahead of the outcome of the Monetary Policy Committee meeting, due on September 30. Most experts expect the repo rate to be increased by 35-50 basis points given that inflation has been above the Reserve Bank of India’s tolerance threshold of 6 percent and following the path of the US Federal Reserve, with no change in the inflation forecast and growth estimates for FY23.

At 7 percent in August, inflation was much higher than the mandate given to MPC to contain inflation in the range of 2-6 percent.

“As a sequel, it’s too early to expect the RBI to adopt a moderate view on the rate hike, like pausing the rate hike at this juncture. We believe the RBI may opt for a rate hike of between 35 and 50 bps in the forthcoming MPC meeting,” said Ajit Banerjee, chief investment officer at Shriram Life Insurance.

While the downtrend in crude oil prices provides some relief, the uneven distribution of rainfall poses some challenges in the price rise of agricultural commodities and the increase in services consumption can lead to a spike in inflation levels, he said.

The Nifty 50 fell 40.5 points to 16,818.10 and the BSE Sensex declined 188.32 points to 56,409.96 at the close, the lowest level since July 27, taking the drop from its mid-September high to more than 7 percent.

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Most key sectors including information technology, banks, financial services, utilities, auto, consumer durables, and power came under pressure.

However, BSE data indicated that more than 100 stocks were at a 52-week high against 64 stocks at a 52-week low, of which 44 stocks were at record highs on a day of weakness, mostly from categories below small-caps.

Stocks that touched record highs include Gujarat Fluorochemicals, Bonlon Industries, Go Fashion (India), Karnavati Finance, Prudent Corporate Advisory Services, Shivalik Bimetal Controls, Softtech Engineers, Captain Pipes, Captain Technocast, EP Biocomposites, GM Polyplast, Growington Ventures India, Gujarat Hy-Spin, and Knowledge Marine & Engineering Works.

Further, Modis Navnirman, Northern Spirits, Olatech Solutions, RMC Switchgears, Sungold Media and Entertainment, Sprayking Agro Equipment, ICL Organic Dairy Products, Advance Petrochemicals, Brand Concepts, Riddhi Corporate Services, Frontier Springs, Infronics Systems, Real Eco-Energy, Sampre Nutritions, Sanmit Infra, Sonal Mercantile, and Sonal Adhesives were also at new highs.

In addition, Star Housing Finance, Vinayak Polycon International, Alstone Textiles (India), Aris International, Golechha Global Finance, Oracle Credit, Perfectpac, POCL Enterprises, Pressure Sensitive Systems (India), Punit Commercials, Sobhagya Merchantile, Sarda Proteins, and Synthiko Foils climbed to a record high.

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Consistent selling by foreign institutional investors following the aggressive mood of the US Fed also caused selling pressure. FIIs have been net sellers in 12 of the 20 sessions in September, taking the total outflow to more than Rs 13,000 crore this month against purchases of over Rs 22,000 crore in August.

Experts largely expect the market to be volatile in the coming weeks and to closely look at US economic data points.

“Until the markets gain clarity on the terminal Fed interest rates and the US mid-term elections, the markets can consolidate. By quarter four of this financial year, we expect the markets to get some clarity on these factors before making the next leg higher,” said Divam Sharma, founder of Green Portfolio.

He ruled out the possibility of the market hitting June lows.

“Since the June lows, the markets have seen a sustainable recovery, and given the domestic demand and insignificant recession risk for India, we do not see the market breaking that level,” Sharma said.

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