(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:
- Infosys guidance
- Auto woes deepen
- Shadow banks in focus
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. With no let up in selling by foreign funds, benchmark gauges are set to cap their third straight week of losses. The good news for bulls is that things are getting better for software exporters, and earnings and commentary from Tata Consumer will be closely watched later today for an outlook on festive season demand. Zee Entertainment, ICICI Lombard and Jio Financial are the other prominent names reporting earnings.
Infosys guidance brightens mood
Infosys raising its fiscal year revenue growth guidance for the second straight quarter could lift the mood for the IT sector, which has lagged behind most others this year. Wipro also exceeded analyst estimates with its quarterly performance. Investors may also be heartened by Infosys’ net addition of over 2,400 employees, following six quarters of net reductions. While IT shares are not exactly cheap, they are less widely held by fund managers compared with some of the other fancied sectors.
Auto sector woes deepen
Two-wheeler shares tumbled on Thursday after Bajaj Auto warned of subdued demand across the industry this festive season. The market had hoped two-wheelers would fare better than passenger vehicles, where dealerships have been reeling under rising inventory. As the sentiment around the auto sector sours, optimism that Hyundai Motor India’s shares will debut at a premium next week is quickly fading.
RBI keeps up pressure on shadow banks
India’s central bank on Thursday directed four shadow banks to halt disbursing new loans after they were found to have overcharged customers and disregarded their ability to meet monthly repayments. The move is part of the broader crackdown on shadow lenders, and investors are concerned about its impact on consumption, particularly during the festive season. However, the central bank seems firm on not letting consumption take precedence over boosting financial stability.
Analysts actions:
- Gujarat Gas Cut to Hold at Antique Stock Broking; PT 620 rupees
- Infosys Cut to Sell at Avendus Spark; PT 1,650 rupees
- Axis Bank Raised to Buy at Anand Rathi Securities
Three great reads from Bloomberg today:
- Supercharging Credit Market Is Key to India’s $5 Trillion Goals
- Oil Advances With Focus on Middle East After Hamas Leader Death
- Big Take: The Billionaire Property Queen on Death Row in Vietnam
And, finally..
India is bracing for a deluge of paper from IPOs, institutional share placements, and stake sales by company founders. So far, the strong demand from wealthy individuals and local mutual funds has helped absorb this supply, helping the Nifty stay on track for its ninth straight year of gains. However, if the supply continues at the same pace, it could become a challenge for the market, which is already facing headwinds from slowing earnings and continued selling by foreigners.
--With assistance from Ashutosh Joshi, Alex Gabriel Simon and Kartik Goyal.
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