Market Bizzz

Europe’s STOXX 600 closed higher on Friday, boosted by tech stocks and an ECB rate cut. The tech sector rose 2%, despite earlier losses after ASML’s weak forecast. Copper prices lifted basic resources shares. Luxury stocks also gained. However, Goldman Sachs cut its 2024 earnings growth forecast for the STOXX 600 to 2%.

As we look towards the next Diwali, the outlook for Indian markets remains largely positive, despite recent volatility sparked by geopolitical tensions. Sensex and Nifty have hit fresh highs this year, supported by robust domestic institutional investments and rising retail participation.

Top brokerage firms have varied recommendations: Nomura recommends buying Axis Bank with a target of Rs 1,380; Morgan Stanley downgrades Manappuram Finance to equal-weight with a new target of Rs 170; Jefferies holds on Havells, cutting the target to Rs 1,870; and Macquarie rates Wipro as outperform with a target of Rs 670.

Godavari Biorefineries sets a price band for its Rs 555-crore IPO at Rs 334-352 per share. The offering comprises a fresh issue worth Rs 325 crore and an offer-for-sale of shares by existing shareholders. Proceeds aim to repay debt, with the company planning expansion amidst financial challenges.

Government decides to use the greenshoe option in Cochin Shipyard OFS after receiving Rs 1,984 crore in bids from institutional investors. Retail buyers can bid on Thursday. Cochin Shipyard shares fell 5% to Rs 1,588.35. The government’s planned stake sale is set at Rs 1,540 per share, potentially fetching over Rs 1,980 crore.

Axis Bank’s shares will be in focus as the private lender reports its September 2024 quarter results, expected to show an 8% rise in net profit year-on-year. Despite recent underperformance, NII is estimated to grow by 10%, supported by lower sequential slippages.

This can indicate potential upward movement and may be used by traders to identify buying opportunities.

HDFC AMC shares gain focus after reporting a 32% YoY increase in Q2 PAT, reaching Rs 576.61 crore. Revenue climbed 38% to Rs 887.2 crore, with total income of Rs 1,058.19 crore. Analysts Jefferies and CLSA express positive sentiments, raising target prices and upgrading ratings.

On valuations, the P/E ratio of the small-cap index (Nifty Small Cap 250) is similar to that of the large-cap (Nifty 100) index, at around 19-20x on two-year forward earnings (excluded loss-making companies in the aggregates). However, the projected earnings growth for small-caps is higher, at 18% for the next couple of years versus 8-10% for large-caps. So, growth-adjusted valuations are not that expensive for small-caps.

Key additions by mutual funds in mid-cap stocks included KPR Mill, Brigade Enterprises, PTC Industries, and Metro Brands.