(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:
- Contract drug makers get a boost
- Consumer stocks at risk
- Thematic funds dominate
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. We’re in for a subdued start to the day, with not much by way of positive tailwinds from the rest of Asia. At home, investors will focus on tech and pharma sectors, awaiting signs that the recent rally has the momentum to accelerate.
New tailwind for contract drug makers
Pharma stocks in India have received a fresh boost that could help the sector become one of the top performers this year. The US House’s passage of the Biosecure Bill, which aims to blacklist Chinese biotech companies, should benefit contract manufacturers such as Piramal Pharma, Laurus Labs and Divi’s Laboratories in the long term. In the short term, it is likely to prompt more investors to shift focus to the sector that has underperformed in recent years. The Nifty Pharma index has risen over 38% so far in 2024, putting it on pace for its best year since 2020.
Uneven monsoon rains may hurt consumer stocks
Investors betting on consumer staples stocks like Hindustan Unilever, Godrej Consumer and Dabur, anticipating a rural demand recovery, may face a setback if uneven rains hurt farm output. While above-average monsoon has lifted consumer stocks, regional variations persist, with key food crop-producing states like Punjab, Bihar, Haryana and Uttar Pradesh seeing double-digit deficits in rainfall, according to rating agency CareEdge.
Households bet big on thematic funds
Thematic mutual funds took in nearly half of the $4.4 billion inflows into Indian equity plans last month, signaling that household risk appetite remains robust despite rising global volatility. Thematic — or sector funds — are typically considered riskier due to their concentrated nature. Small- and mid-cap mutual funds also saw combined inflows of $750 million, as investors continue to place their trust in these segments despite signs of overheating.
Analysts actions:
- Newgen Software Rated New Buy at Dolat Capital; PT 1,300 rupees
- Indus Towers Raised to Overweight at JPMorgan; PT 500 rupees
Three great reads from Bloomberg today:
- Trump, Harris Spar Over Economy, Abortion Rights in Debate
- China’s Unworkable Housing Rescue Math Is Prolonging Crisis
- Traders Still See at Least Two Jumbo Fed Cuts Coming Soon
And, finally..
The rupee has been one of Asia’s least volatile currencies this year, helping burnish the appeal of Indian assets even as a resurgent dollar wreaked havoc in global currency markets. That may change. The rupee could face turbulence if Donald Trump returns to power, warns Spectra Markets. The former president has pledged to impose tariffs on trading partners seeking to reduce reliance on the dollar, potentially affecting India due to its efforts to promote greater global use of the rupee.
--With assistance from Alex Gabriel Simon.
©2024 Bloomberg L.P.
