February 7th 2024 Stock Market analysis

Indian Equities Settle Flat Midweek Ahead of Central Bank Decision

Indian indices closed without significant changes on Wednesday, with investors awaiting the central bank’s monetary policy decision scheduled for the following day. The BSE Sensex and NSE Nifty concluded with a mixed performance, as declines in IT stocks offset gains in the financial and real estate sectors.

The NSE Nifty closed marginally higher at 21,930, recording a minimal increase of +0.01%, while the BSE Sensex concluded at 72,152, experiencing a slight decline of -0.05%. Among the top gainers were SBIN, soaring by 4.19% to trade at 677.5, followed by GRASIM at 2115.2 with a rise of 2.38%, and HDFC LIFE reaching 606 with a gain of 2.24%. Conversely, leading the losses were TechM, plummeting by 2.67% to trade at 1315, Powergrid with a decline of 2.50% at 267.4, and INFY dropping by 1.99% to 1695.

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Technical Outlook on 8th Feb

Nifty is anticipated to find immediate support around 21,834 followed by 21,738, while resistances are projected at 22,026 and 22,074. Presently, Nifty is poised for a mixed trading session.

For Bank Nifty, immediate support levels are likely to be around 45,598 and 45,378, with resistances expected at 46,039 and 46,260. Bank Nifty is also indicating a mixed trading sentiment at the moment.

Derivative Outlook on 8th Feb

PCR Analysis: Nifty PCR-OI has decreased with nifty has flat close which shows mild CALL WRITING.

Open Interest Analysis: Nifty future Feb contract OI has increased with positive close which shows Long Buildup.

Cost of Carry Analysis: Nifty FEB month contract has ended in low compare with MARCH contract and high range compare with previous session which indicates a mixed trade.

India VIX Analysis: India VIX has closed at 15.51 vs 15.79 (DoD) basis which shows decrease in volatility.

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Nestle India Reports Robust Performance: Net Profit Surges by 4.4% and Revenue Climbs 8% in December Quarter

On February 7, Nestle India reported a 4.4 percent increase in net profit, reaching Rs 655.6 crore for the quarter ended December 31, 2023, compared to Rs 628 crore in the previous year. Revenue from operations for the same quarter surged by 8.05 percent year-on-year to Rs 4,600 crore from Rs 4,257 crore.

Nestle India operates on a January-to-December financial year basis. For the full year ending December 31, 2023, total income from operations amounted to Rs 1.689 lakh crore, reflecting a 13 percent rise from Rs 1.69 lakh crore in the previous year.

Following the earnings report, Nestle's shares soared, trading 2 percent higher at Rs 2,511.55 apiece around 1 pm on the NSE.

During the quarter, Nestle India's Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) stood at Rs 1,077 crore, marking a 10.2 percent increase from the same quarter in the previous fiscal year. Gross margins also improved, rising by 50 basis points to 23.4 percent compared to 22.9 percent in Q4FY23.

During the quarter, domestic sales surged by 8.9 percent, propelled by pricing and mix growth, alongside robust momentum in e-commerce and out-of-home channels.

Throughout the year 2023, Nestle India witnessed a notable uptick in total sales, exceeding 13.3 percent growth and surpassing the Rs 19,000 crore milestone.

However, the period also saw the firm incur a one-time loss of Rs 107.3 crore due to a change in the cost of servicing the defined pension benefit.

The board of directors has announced a third interim dividend for the Financial Year 2023-24, amounting to Rs 7 per equity share with a face value of Re 1 each, totaling Rs 674.91 crore. This dividend is scheduled to be paid on March 5, 2024.

In a filing with the exchanges, the FMCG player, Nestlé SA, stated its intention to leverage business services and specialized capabilities for relevant global markets from the Nestlé Business Services (NBS) division. The board of directors has approved the slump sale of the NBS Division of the Company to Purina PetCare India, a 100% subsidiary of Nestlé S.A., for an aggregate consideration of Rs 79.8 crore.

Anticipating the earnings report, brokerages forecasted robust revenue growth and a strong double-digit surge in net profit for Q4FY24, supported by improvements in both volumes and pricing. According to a poll of five brokerages, Nestle India's Q4 revenue was expected to grow by 9.7 percent year-on-year to Rs 4,646 crore. The FMCG player was also projected to report a 14.5 percent year-on-year increase in its fiscal fourth-quarter net profit, reaching Rs 721 crore.

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