The Indian stock market faced a turbulent session on October 15, with the Sensex and Nifty 50 indices slipping into negative territory, primarily dragged down by heavy losses in Reliance Industries, Bajaj Finance, and Bajaj Auto. Despite the resilience shown by mid and small-cap stocks, the broader market sentiment was marred by weak global cues, unimpressive second-quarter (Q2) earnings reports, and rising inflation concerns.

The Sensex closed 153 points lower, at 81,820.12, marking a 0.19% decline, while the Nifty 50 slipped 71 points, or 0.28%, to end the session at 25,057.35. The losses in the large-cap stocks overshadowed gains seen in smaller segments, leaving the market divided between performance in the heavyweight stocks and the mid-to-small cap spectrum.

Global Factors and Earnings Impact

Weak global cues contributed to the fall in Indian markets. European stocks and US futures traded mixed, offering no clear direction for local investors. Meanwhile, crude oil prices fell sharply following reports that Israel would not target Iranian energy installations in its ongoing conflict, creating a volatile backdrop for global markets. Despite this, the drop in oil prices did provide some cushion, particularly for oil marketing companies and related sectors, which saw gains.

The domestic market has also been grappling with uninspiring Q2 earnings. Investors have been disappointed by the muted performance of some key players, including Reliance Industries, which reported a 4.8% drop in consolidated net profit for Q2 FY25. Reliance's net profit came in at ₹16,563 crore, lower than market expectations. Given that Reliance is a heavyweight in the Indian stock market, any negative news from the conglomerate significantly affects market sentiment, pulling the Nifty 50 and Sensex indices down.

For long-term market sustainability, earnings growth is crucial. Companies need to post solid earnings that can justify high valuations. The Indian market has been trading at stretched valuations, meaning the price-to-earnings (P/E) ratio is on the higher side. Without significant earnings growth, these valuations become difficult to maintain, leading to sharp corrections like the one seen today.

Inflation Fears Return

Adding to the market's troubles, the spectre of inflation returned with India's retail inflation rising to a nine-month high in September. The Consumer Price Index (CPI) showed a year-on-year increase to 5.49% in September, up from 3.65% in August, largely driven by rising food prices. This uptick in inflation has raised concerns about the Reserve Bank of India’s ability to ease interest rates in the near future, putting further pressure on the market.

With inflation climbing and no imminent relief from interest rate cuts, sectors reliant on consumer loans, such as automobiles and real estate, took a hit. For instance, the Nifty Auto index declined by nearly 1%, with stocks like Bajaj Auto, Tata Motors, and Maruti Suzuki witnessing substantial losses.

Sectoral Performance and Mid-Small Cap Gains

While the larger indices struggled, the BSE Midcap and BSE Smallcap indices managed to stay afloat, delivering gains of 0.25% and 1.05%, respectively. This divergence indicates that mid and small-cap stocks are showing resilience, even as large-cap stocks face selling pressure. These stocks are often seen as growth-oriented, and their performance today reflected investor interest in segments that are less impacted by global market trends and heavy reliance on international cues.

Several stocks from the technology and pharmaceutical sectors hit new 52-week highs, including Infosys, HCL Tech, Tech Mahindra, Divi’s Labs, and HDFC Asset Management Company. Their performance helped offset broader market losses and showed the ongoing investor confidence in India's growing tech and pharma sectors.

Commodities and Oil Price Impact

In the commodities space, Brent crude futures tumbled by more than 5%, falling to $73.6 per barrel. This sharp decline in oil prices provided a much-needed boost to oil marketing companies such as BPCL and HPCL, which rose by 2.5% and 5%, respectively. Additionally, paint stocks, which benefit from lower oil prices, saw a significant uptick, with Indigo Paints and Berger Paints both gaining over 2%. These gains in specific sectors helped cushion the overall market from deeper losses.

Outlook and Investor Sentiment

Looking ahead, the market lacks clear catalysts to drive sustained growth. Investors are hoping for a better earnings season, but so far, the results have been mixed at best. Without strong earnings, particularly from market heavyweights like Reliance and Bajaj Finance, the market's current levels appear difficult to justify.

Furthermore, inflation concerns loom large. The rise in retail inflation for September has raised the spectre of a delay in rate cuts by the Reserve Bank of India, dampening hopes for near-term economic relief. Analysts like V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, believe that the Monetary Policy Committee (MPC) may be forced to delay a rate cut to 2025, given the current inflationary pressures.

However, mid and small-cap investors are likely to remain optimistic. The continued outperformance of these segments could attract more retail investors, particularly in sectors showing resilience like technology and pharma.

Stocks in News Today:

Several stocks were in focus today as they reported their Q2FY25 earnings or made significant announcements that impacted their share prices. Among these, Newgen Software Technologies and Bank of Maharashtra stood out with strong earnings growth, while Reliance Industries faced some headwinds despite revenue gains. Let's take a closer look at the stocks making headlines and how they performed in the market.

Newgen Software Technologies: Net Profit Surge

Newgen Software Technologies saw its net profit soar by 47.8% quarter-on-quarter (QoQ) to ₹70.3 crore in Q2FY25. The company's revenue also posted impressive growth, increasing by 12.6% QoQ to ₹379.7 crore. This performance was driven by improvements in key markets such as India, Europe, the Middle East and Africa (EMEA), Asia-Pacific (APAC), and the USA.

Newgen's strong results have placed it in a screener of stocks with notable quarterly net profit and profit margin growth. Investors are particularly interested in the company's ability to expand across global markets, which has boosted its earnings and set the stage for future growth.

Bank of Maharashtra: Impressive YoY Profit Growth

Bank of Maharashtra also made headlines by posting a 44.2% year-on-year (YoY) surge in net profit to ₹1,326.8 crore for Q2FY25. The bank's revenue grew by 18.7% YoY to ₹6,017.4 crore, fueled by strong performances in its treasury operations, corporate banking, and retail banking segments.

A key highlight for the bank was the improvement in its asset quality, with gross non-performing assets (NPAs) and net NPAs contracting by 35 basis points (bps) and 3 bps YoY, respectively. This reduction in bad loans reflects the bank's focus on improving its balance sheet and profitability, which has resonated positively with investors.

Reliance Industries: Declining Net Profit

In contrast to the above, Reliance Industries experienced a challenging quarter, reporting a 4.8% YoY decline in net profit to ₹16,563 crore. Higher costs related to raw materials, excise, employee benefits, and finance negatively impacted its bottom line. However, revenue grew by 0.7% YoY to ₹2.4 lakh crore, with gains in its oil-to-chemicals (O2C) and digital services segments.

Despite the revenue growth, the market reacted negatively to Reliance's profit decline, as the company remains a bellwether for the Indian stock market. This puts Reliance in a screener of stocks that are experiencing declining net cash flow, highlighting investor concerns about its ability to sustain profit growth amidst rising costs.

PVR Inox: Revenue Beats Estimates but Posts Loss

PVR Inox was another stock in the spotlight, as it reported a net loss of ₹11.8 crore in Q2FY25, compared to a net profit of ₹166.3 crore in the same quarter of the previous year. While the company’s revenue beat analyst estimates by 4.8%, it still declined by 19% YoY to ₹1,622 crore.

The ongoing challenges faced by PVR Inox, including a drop in footfall and increased operational costs, have weighed on its profitability. However, foreign institutional investors (FIIs) and other institutions have increased their shareholding in the company, signaling long-term confidence in its ability to bounce back.

BEML: Major Contract Win

BEML surged after securing a contract worth ₹866.9 crore from the Integral Coach Factory (ICF) in Chennai. The contract involves designing, manufacturing, and commissioning two high-speed trainsets, each comprising eight cars. This significant order win reinforces BEML’s position as a key player in India's railway modernization efforts and has been a key factor in its share price rise.

Sunteck Realty: Strong Pre-Sales Growth

Sunteck Realty witnessed sharp gains as the company reported a 32.7% YoY increase in pre-sales to ₹524 crore for Q2FY25. Additionally, its collections grew by 24.8% YoY to ₹267 crore during the same period, reflecting robust demand in the real estate sector.

The company's strong performance has placed it in a screener of stocks with zero promoter pledge, indicating its strong financial health and confidence in its future growth prospects.

Motilal Oswal Upgrades Ipca Laboratories

Ipca Laboratories received a major boost after Motilal Oswal upgraded its rating from ‘Neutral’ to ‘Buy’ with a higher target price of ₹1,950 per share. This upgrade implies a potential upside of 15% for the stock.

The brokerage is positive on Ipca due to its strong domestic brand, improving US Food and Drug Administration (FDA) compliance, and synergies from its Unichem acquisition. Ipca is expected to grow its revenue at a compound annual growth rate (CAGR) of 16.1% over FY25-27, making it an attractive buy for investors.

JSW Infrastructure: Major Port Development Project

JSW Infrastructure received a letter of intent from the Maharashtra Maritime Board to develop, operate, and maintain a multipurpose port in Murbe village, Palghar District, Maharashtra. The project will be carried out under a Public-Private Partnership (PPP) model, and it has bolstered investor confidence in JSW’s ability to expand its footprint in India's infrastructure sector.

RPP Infra Projects: Upper Circuit

Shares of RPP Infra Projects surged to their 5% upper circuit after the company secured an order worth ₹217.6 crore from the Chief Engineer & Project Director (EAP) in Mumbai. The project involves upgrading key road infrastructure in the Jalgaon District, Maharashtra.

Angel One: Strong Earnings Growth

Angel One delivered a stellar performance, with its net profit rising by 39.1% YoY to ₹423.4 crore in Q2FY25. The company's revenue grew by 44.5% YoY to ₹1,516 crore, driven by an expanding client base, an increase in the number of orders, and a rise in average daily turnover. These results have made Angel One a standout performer in the broking industry.

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