(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:
- Cinema chains set for revival
- Pharma stocks in limelight
- Tech firms eye better bargains
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Nifty futures are pointing to a flat start to trading in India, which puts the benchmark on course for a weekly fall after three weeks of gains. Traders will keep eyes on small- and mid-caps which continue to outperform. Asian stocks were mixed Friday, with the regional benchmark also heading for a weekly drop.
Revival in sight for multiplex chains
Things are looking up for India’s largest multiplex chains. PVR Inox shares are close to erasing their 2024 losses, while Mukta Arts turned positive for the year on Tuesday. Following the success of movies like ‘Stree 2,’ early numbers for the newly released ‘Goat’ also look strong, according to Nuvama Wealth Management. Nuvama expects earnings to improve in the second half of the ongoing financial year for PVR Inox, with highly anticipated releases such as Transformers One, Venom and Gladiator II.
Pharma stocks shine as investors seek safe haven
Investors have been taking refuge in the defensive pharma stocks amid stretched valuations in the broader market. The NSE Nifty Pharma index has gained over 15% in the past two months, compared to a 3.5% rise in the Nifty. Benign input costs and stabilizing generic drug prices in the US have supported this rally. Sun Pharma and Lupin beat analysts’ expectations in the June quarter, and if the stable pricing continues, these stocks may get a further fillip driven by strong earnings growth in the coming quarters.
Software firms eye better bargains
Software firms have been major drivers of the Nifty’s strong performance this year, with Infosys and Tata Consultancy Services each gaining more than 20%. Analysts expect further growth as tech spending gradually improves. Revenue per employee has risen recently as companies make better use of their staff, say analysts at HSBC. While margin pressure could increase due to high staff utilization and a stable currency, it will also lead to higher rates, especially benefiting large firms’ onsite business.
Analysts actions:
- SBI Cut to Sell from neutral at Goldman
- Indus Towers Cut to Sell at Goldman; PT 350 rupees
- LTIMindtree Raised to Overweight at Morgan Stanley
Three great reads from Bloomberg today:
- Tough Competition for $178-a-Month Roles Shows India Jobs Crisis
- US Jobs Report May Show Hiring Bounce, Decide Size of Fed Cut
- China’s $100 Billion Short Against Dollar Enriches Hedge Funds
And, finally..
The rupee has been hovering near the key 84 per dollar level for over a month, as traders test the RBI’s resolve in defending this level. Meanwhile, other emerging market peers have done better in recent days against a weakening greenback. With the US Fed widely expected to cut interest rates this month, the rupee could participate in a wider EM rally, pulling back from this key threshold. Analysts in a Bloomberg survey predict it may reach 83.50 by end-December.
--With assistance from Chiranjivi Chakraborty and Ronojoy Mazumdar.
©2024 Bloomberg L.P.
