Nifty and Sensex are set to open lower, with HUL and Bajaj Finance under the spotlight
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Summary: The GIFT Nifty was trading at 24,403.5 points as of 7:59 am, indicating that the NSE Nifty will open lower than Tuesday's closing of 24,479.05.
The hefty tax hike on equity trading is expected to cause Indian benchmarks to open lower on Wednesday. Investor responses to the quarterly results of non-bank lender Bajaj Finance and consumer goods titan Hindustan Unilever (HUL) will also be of particular interest.
The NSE Nifty is expected to open below Tuesday's close of 24,479.05. The GIFT Nifty was trading at 24,403.5 points as of 7:59 am.
Following the government's hike in the capital gains tax rate on equity investments and equity derivatives trades, the blue-chip index fell 1.6% on Tuesday. Despite this, a surge in consumer stocks after the government announced a $32 billion allotment for rural initiatives in its annual budget helped to offset the majority of the losses.
"The unexpected rise in both short- and long-term capital gains taxes is detrimental to the markets," said Nikhil Ranka, Nuvama Asset Management's Chief Investment Officer for Equity Alternatives. "The focus seems to have shifted from capex thrust to employment generation, which could put near-term pressure on defense and railway stocks," said Ranka.
Investor focus will be on Hindustan Unilever following the company's Tuesday announcement of increased first-quarter profits, which were fueled by price reductions and a rebound in its core home care sector. Following the lender's announcement of higher June quarter profits as a result of loan growth, Bajaj Finance shares will also be greatly monitored.
The day after US equities closed down overnight, Asian shares declined as investors focused on big company earnings.
Tuesday saw the largest withdrawals from domestic equities since June 26 as foreign investors net sold shares worth Rs 2,975 crore (about $355 million). In contrast, exchange data shows that domestic investors net bought shares valued at Rs 1,419 crore.
Stocks to watch:
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ICICI Prudential: The company announced an increase in first-quarter earnings, attributed to solid market-linked product demand.
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United Spirits: Due to strong demand for its premium alcohol brands, the company reported a larger-than-expected gain in first-quarter profit.
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Torrent Pharmaceuticals: Consolidated net profit forecasts for Q1 were missed.
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Highlighted Earnings: SBI Life Insurance, Larsen and Toubro, and Axis Bank
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