(Bloomberg) -- Before the trading day starts we bring you a digest of the key news and events that are likely to move markets. Today we look at:
- Indian stocks lead Asia
- Rupee nears key 84 mark
- Bangladesh crisis to aid Indian textile makers
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Nifty futures point to a strong opening thanks to dovish remarks from Bank of Japan and strong gains overnight on Wall Street, which have sparked risk-on moves in Asian equities. Although global markets have regained some stability, the India VIX, or ‘fear gauge’, remains elevated, signaling that domestic shares may face hurdles on the path to full recovery after the wild start to the week.
India stocks lead Asia despite global turbulence
Indian stocks have been hit by this week’s global market slump, but they’re still some of the top performers in Asia, maintaining gains above 10% for 2024. Unlike many peers, India hasn’t been affected by cross-border yen borrowing. Sujan Hajra, an economist at brokerage Anand Rathi, notes that India’s involvement in this trade is small — about $20 billion, which is less than 3% of the global total. He credits the RBI’s tighter rules for making India’s financial sector more resilient, with solid forex reserves and strong economic performance protecting the country from the yen-carry trade reversal’s fallout.
Rupee nears key 84 mark as dollar roars back
The rupee felt the heat from the rebound in global markets after Monday’s rout, with the dollar making a strong comeback. India’s currency continues to edge deeper into record-low territory and is nearing the symbolically important 84 per dollar mark. Although the central bank has been using its reserves to moderate the size of moves so far, traders are wondering how firmly it can defend this level going forward.
Bangladesh crisis may offer Indian textile makers an edge
The political crisis unfolding in Bangladesh is propping up shares of Indian textile makers. As the unrest deepens, that country’s mammoth textile sector may start losing clients concerned about supply delays. Investors expect Indian manufacturers to fill the gap. On Tuesday, shares of KPR Mill, Arvind and Welspun Living ripped higher as analysts see this as an opportunity for India to capture a larger share of the global apparel export market.
Analysts actions:
- Bandhan Bank Raised to Accumulate at KR Choksey; PT 217 rupees
- Paradeep Phosphates Cut to Neutral at SKP Securities
- SJS Enterprises Cut to Take Profits at Way2Wealth Brokers
- VRL Logistics Raised to Reduce at Equirus Securities
Three great reads from Bloomberg today:
- BOJ’s Uchida Says No Rate Hike When Financial Markets Unstable
- Big Take: Private Credit Fund Burned by Risky Bets Bleeds Cash
- Goldman Seeks Gains in Korea and India During Asian Stock Slump
And, finally..
Focus shifts to macro policy as India’s central bank announces its rate decision on Thursday, with potential suprises ahead. The RBI might start cutting rates as soon as in this review due to concerns about a US hard landing and high real rates affecting domestic growth, according to Bloomberg Intelligence economist Abhishek Gupta. With core inflation at a record low, easing food-price increases, and surplus liquidity, a 25 basis pointe to 6.25% and a shift to neutral stance are anticipated, he says.
Source: RBI, Bloomberg, Bloomberg Economics
--With assistance from Ronojoy Mazumdar and Chiranjivi Chakraborty.
©2024 Bloomberg L.P.
