(Bloomberg) -- (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:
- Festive demand
- Rice outlook
- Chemical makers
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. The outlook for stocks this morning is as hazy as the city’s skyline, with Nifty futures signaling a tepid start. But positive cues from other Asian markets and quarterly earnings reports from Nifty heavyweights — Infosys, Wipro, Axis Bank and Nestle India — may lend support.
Double engine growth or double whammy ahead?
India’s festive and wedding season will be crucial for company earnings — and market sentiment. Investors are confident that these events will drive a revival in demand, but if sales fall short, it could spark further downgrades to earnings estimates, warns Prabhudas Lilladher. This would dampen the appeal of Indian stocks compared to other Asian markets like China, Japan and Taiwan. The MSCI India index is already trailing the broader Asian gauge this month, as foreign investors shift their focus toward China.
Betting big on basmati boom
As investors keep a close eye on consumer spending during the festive period, one sector that’s doing well is rice. Demand for specialty and exotic varieties like basmati and jasmine rice is booming, thanks to shifting consumer preferences. With India controlling three-fourths of global basmati exports, local players such as KRBL and LT Foods are set for further gains. Mirae Asset points out that the recent removal of the minimum export price for basmati is giving these companies even more room to grow.
Chemical makers face mixed signals
There are signs of improvement for underperforming chemical makers. According to a Centrum report, production in Europe is rising steadily, and that is good news for Indian firms. But caution is warranted: although chemical exports have risen in recent months, the recovery has been erratic, and there are no clear signs of a sustained uptrend. While the worst may be over for the industry, investors would do well to temper their expectations. Sudarshan Chemical is up about 100% this year.
Analysts actions:
- DMart Cut to Sell at HDFC Securities; PT 3,800 rupees
- Bajaj Auto Cut to Sell at DAM Capital; PT 9,750 rupees
- Reliance Rated New Buy at DAM Capital; PT 3,042 rupees
Three great reads from Bloomberg today:
- India’s Own Private Credit Firms Drive First $10 Billion Year
- Trader Bonus Hopes Swell on Wall Street After Big Banks Surge
- Big Take: The Auto Industry Is Terrified of BYD’s Cheaper EVs
And, finally..
Elevated interest rates are starting to weaken demand for bank loans. Credit growth slowed to 13% in the year through Sept. 20, down from 20% at the end of last year. The decline is driven by a slowing economy and high borrowing costs, according to Sujan Hajra, chief economist at Anand Rathi Share & Stock Brokers. Loan growth is unlikely to rebound quickly, with Hajra expecting it to remain between 12%-15% over the next 12 months, constrained by weak deposit growth.
--With assistance from Alex Gabriel Simon, Ashutosh Joshi and Kartik Goyal.
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