Share Market Highlight: Markets end lower! Nifty closes below 21,700, Sensex gains above 71,645 points; Media and Metal stocks losses

“The play around budget day is usually around stocks that could benefit from favourable announcements, but with the February one being only a vote on account budget, opportunities may be limited. Yet, we are okay with playing the renewable energy theme as well as railway theme via bororenew and RVNL respectively, despite them having registered substantial gains recently. Meanwhile, Nifty has benefitted Reliance and Adani stocks’s surge, helping the index to touch a distance of 21800, a region that has attracted rejection trades recently. However, we remain positive for continued rise towards 22190 as long dips are contained above 21490, but would be forced to consider 20900, should we slip back below 21330. Option traders would do well to note that VIX usually rises in the fortnight ahead of budget, with last year seeing a 66% rise during the same period, only to see a steep fall in VIX, post budget. Though the full year budget is only in July, the rise in VIX from the fortnight’s low is still underway, with a near 30% rise so far. Towards this end, we favour short strangles on Nifty,” said Anand James, chief market strategist at Geojit Financial Services.

Shares of Power Grid Corp rose 3.8% to Rs 268.65. The stock was the top gainer in the Nifty 50.

BSE Bankex fell over 150 points or 0.30% to 51,837.99.

Godrej Consumer Products rose nearly 13% to hit a new 52-week high.

Shares of Bajaj Auto rose 0.8% to hit a fresh 52-week high of Rs 7,732.05.

BPCL, Cipla, Eicher Motor, Mahindra & Mahindra, and Maruti Suzuki were the top gainers in the Nifty 50. While LTIMindtree, L&T, Grasim Industries, Wipro, and JSW Steel were the key losers.

“While India can boast of unprecedented growth of digitalisation in payments echo system,the RBI as regulator is enjoined with the responsibility of ensuring a robust system with ultimate interest of the public and customers in mind .The restrictions imposed by RBI on Paytm bank as per today’s press release indicate the concerns RBI has in mind regarding the compliance of prescribed rules and guidelines to ensure a strong and sustainable mechanism as required by a payments Bank.While the complete details are awaited , there is an apparent case of audit findings indicating persistent ,major non compliance of prescribed mechanisms and guidelines to be adhered to with regard to IT systems and overall operations as a licencee of Payments Bank.The operations by existing customers will get impacted as the transfer and deposit of funds is proposed to be restricted beyond 29 February 2024 and only withdrawals of the outstanding balances as on 29 th February and interest payment etc shall be permitted,” said Jyoti Prakash Gadia, managing director at Resurgent India.

The existing customers of Paytm may choose to revert back to the manual cash payments or opt for the services of other Payment Bank Platforms available in the market.This drastic step by RBI underscores the element of caution which needs to be kept in mind while handling digital transactions.This is required both from cyber security angle as also from the point of view maintaining privacy of data of the customers and keeping a close watch on the nature of transactions which should adhere to the prescribed regulations of RBI, said Gadia.

Bajaj Auto‘s January 2024 total sales increased by 23.6% to 3,56,010 year on year, including both two-wheelers and commercial vehicles.

The NSE Nifty 50 opens 0.25% higher to settle at 21,780.65, while the BSE Sensex jumps 0.34% to 71,994.36 in the opening trade.

The broking firm Jefferies downgraded the stock of Paytm to “Underperform” from “Buy”. The brokerage house has also slashed the target price by half to Rs 500 from Rs 1,050, earlier.

Direct impact (on wallets/payments) can be 20-30% of Ebitda & reputational impact on lending partnerships can affect further by 20-25%. This drives us to cut FY25-26

Ebitda by 45%, which will also delay profitability. Tightening compliance/ governance is the way out, said Jefferies in a research report.

Jefferies in a research report said that the RBI, in a strong statement, has imposed restrictions on Paytm‘s payment bank due to non-compliance. The key impact can be on the lending business (+20% of revenues) if lending partners limit business due to operational/ governance risks. Also: a) wallet GMV (5% of total) may need to be wound down; b) merchants using Paytm Bank (6% of devices) may be impacted; c) Fastag GMV will be majorly affected. This can be a key risk to earnings/ valuations & we await details from management.

Shares of Bharti Airtel fell 3.9% to Rs 1,125 in the pre-open market. The stock was the key loser in the Nifty 50.

Foreign institutional investors (FII) bought shares worth net Rs 1,660.72 crore. Domestic institutional investors (DII) bought shares worth net Rs 2,542.93 crore on January 31, 2024, according to the provisional data available on the NSE.

ZEE Entertainment Enterprises and Steel Authority of India were the stocks in the F&O ban list.

The Reserve Bank of India (RBI) on Wednesday disallowed Paytm from receiving any deposit or credit transactions after February 29.

“No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime,” said the RBI notification.

“The Rupee closed stronger to gain 8 paisa at 83.04 amid recovery in domestic equity markets and fall in dollar against major currencies, including India. Better economic growth forecasts for 2024 from the IMA as well as increase in India’s growth forecast gave support to the rupee. We expect the rupee to remain in a range ahead of the U.S non-farm payroll data with the pair likely to trade in the range of 82.80-83.45,” said Rahul Kalantri, vice president of commodities at Mehta Equities.

A positive build-up was reflected in Indian markets prior to the interim budget, although expectations are low, the market anticipates a lower fiscal deficit supported by buoyant tax revenues. The overall trend in the market is akin to a seesaw, and the buy-on-dips strategy is effective as of now. The pharma sector stood out with a positive earnings outlook. Global market cues are mixed ahead of the FOMC meeting, and US 10-year yields were marginally down. An immediate rate cut seems improbable, but indications about the future trajectory could ease volatility, said Vinod Nair, head of research at Geojit Financial Services.

Shares in the Asia-Pacific region were trading in mixed territory. The Asia Dow was trading up by 0.42%. Whereas Japan’s Nikkei 225 was trading in the red, down by 0.64% and Hong Kong’s Hang Seng index was trading lower by 1.39%. The benchmark Chinese index Shanghai Composite was trading lower by 1.48% during the early trade hours.

WTI crude prices are trading at $76.19 up by 0.45%, while Brent crude prices are trading at $80.85 up by 0.38%, on Thursday morning.

The US Dollar Index (DXY), which measures the dollar’s value against a basket of six foreign currencies, traded higher by 0.28% at 103.56.

The three major US benchmark indices closed in red, with the S&P 500 falling to 4,845.65. The tech-heavy Nasdaq Composite slipped 2.23% at 15,164.01. The 30-stock Dow Industrial Average closed 317.01 points, or 0.82% lower at 38,150.30.