(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:
- Hyundai IPO faces sector woes
- BJP’s poll win
- Dim earnings outlook
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Asian stocks are broadly higher this morning and FTSE Russell overnight announced adding Indian bonds to its emerging-market bond index. Bharatiya Janata Party’s surprise win in the Haryana polls is also boosting the positive mood. Should the central bank too surprise with a rate cut at its policy meeting later today, that would be the icing on the cake for stock market bulls.
Hyundai India’s IPO comes as auto sales dip
Hyundai Motor India’s $3.3 billion IPO — the largest in the nation’s market history — is coming at a tricky time for the auto sector. Sales have been slowing down, and inventories at dealerships have piled up to 80-85 days of stock. The dealers’ body has even urged automakers to address the issue. Still, there’s hope that the buzz around Hyundai’s IPO will rub off on other auto stocks too and that festive season sales may be better than expected.
BJP’s Haryana wins sparks investor confidence
A surprise victory by the Bharatiya Janata Party in elections for the Haryana state legislature should reassure investors concerned about the recent dip in Prime Minister Narendra Modi’s popularity. The results fired up stocks likely to benefit from the state government’s policies. The market sees the win as a positive sign for the BJP’s ability to maintain alliances ahead of the upcoming Maharashtra elections.
Earnings outlook fades
While the BJP’s Haryana win eases some concerns around political stability, worries about foreign fund selling and high valuations still linger. On top of that, the upcoming quarterly earnings could disappoint. Elara Capital expects July-September profits to decline both year-on-year and sequentially, marking the first decline in seven quarters. Motilal Oswal estimates Nifty 50 earnings to grow by just 2%, the lowest in 17 quarters, partly due to last year’s high base.
Analysts actions:
- Astral Raised to Buy at Prabhudas Lilladher; PT 2,214 rupees
- Bajaj Auto Cut to Hold at Prabhudas Lilladher; PT 11,146 rupees
- Ceat Cut to Hold at Prabhudas Lilladher; PT 3,107 rupees
Three great reads from Bloomberg today:
- US Says It’s Weighing Google Breakup as Monopoly Case Remedy
- Indians Pour Their Family Savings Into IPOs, Stoking Bubble Fear
- Big Take: Fecal Contamination in Perrier Well Sparks Scrutiny
And, finally..
Indian funds have been on a buying spree, snapping up more than $1 billion of shares daily for three straight sessions through Monday. That’s helped offset foreign investors’ sales as they shift focus to China. Domestic institutions, including mutual funds and insurers, bought over $4 billion of shares during this time, data compiled by Bloomberg show. Before Tuesday’s gains, local shares had fallen for six straight days, with global funds pulling about $5.4 billion since the start of last week.
--With assistance from Ashutosh Joshi, Alex Gabriel Simon and Kartik Goyal.
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