(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:
- Reliance’s AI moment
- Realty faces festive season test
- Corporate borrowers
Good morning, this is Chiranjivi Chakraborty an equities reporter in Mumbai. Stock investors will be glad to see the end to a rough week, as the Nifty faces its fourth straight weekly loss. Selling by foreigners persist, with the exodus now spilling over to bonds. Upcoming earnings reports from Coal India and Bank of Baroda could set the trajectory for state-owned shares.
No AI relief for Reliance shares
Mukesh Ambani sharing the stage with Nvidia’s Jensen Huang during his visit to India should have been a sentiment booster for Reliance Industries’ investors. However, the shares of India’s most valued company are in such a slump that even this PR moment hasn’t had much impact. Reliance shares have fallen over 16% from their record high in July, as its main energy and retail verticals struggle, while its telecom business faces new challenges from Elon Musk. This reflects the broader market mood, where investors are now demanding to see the earnings growth after paying steep valuations for much of the past year.
Reckoning time for developers
Realty stocks were among Thursday’s notable laggards, with the sectoral index falling just over 1%. All eyes will be on DLF and Macrotech Developers for their festive season outlook when they announce quarterly numbers Friday. The realty index is already down 10% from its June peak. While anecdotal evidence points to a continuing boom in the property market, stock prices suggest a possible peak could be around the corner.
Corporate borrowers face tough times
Borrowing costs for companies have risen to a two-week high and are expected to stay elevated as liquidity in the banking system tightens. Increased consumer spending ahead of the Diwali festival is reducing surplus cash, while RBI Governor Shaktikanta Das’s warning against rate cuts and the central bank’s crackdown on errant lenders are also pushing yields higher, making financing more expensive for companies.
Analysts actions:
- Colgate India Raised to Buy at Centrum Broking; PT 3,781 rupees
- DCB Bank Raised to Buy at Dolat Capital; PT 150 rupees
Three great reads from Bloomberg today:
- India Bond Outflows Highlight Impact of Swap Trade Unwinding
- China Refrains From Cutting Policy Rate After Record Trim
- Big Take: Wall Street Takes Tax-Loss Harvesting to Next Level
And, finally..
Not just stocks — foreigners are pulling out of Indian debt as well. The index-eligible bonds are seeing their first monthly outflow in six months as foreigners unwind a popular swap trade used to tap the country’s $1.3 trillion sovereign debt market. The Fully Accessible Route bonds — a special category of debt that’s freely available to foreigners — have seen outflows of about 40 billion rupees ($476 million) so far this October.
--With assistance from Subhadip Sircar and Kartik Goyal.
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