(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:
- Bulls are back
- IT stocks defy Trump
- DMart’s woes intensify
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Traders are bracing for an exciting start to the day after the BJP-led alliance’s thumping victory in the Maharashtra state polls. Nifty futures are up over 1% and odds favor the underlying index reclaiming 24,000. The market sees the win as a sign of policy continuity in the country’s wealthiest state. Some concerns still linger about the Adani Group, foreign investor outflows and expensive valuations.
Investors eye policy push as BJP sweeps Maharashtra
With Prime Minister Narendra Modi’s party-led alliance winning a decisive mandate, investors will be closely monitoring Maharashtra’s and its financial capital Mumbai’s economic policies. Welfare measures, like cash aid for women and the elderly, are expected to boost consumption-driven sectors, from staples to discretionary items. As for infrastructure, both state-backed and private players like Larsen & Toubro, IRB, and HCC may benefit from pledges of building expressways. The Adani Group may also find some relief with the BJP’s return in the state, as it moves ahead with the ambitious Dharavi redevelopment project in Mumbai.
Tech stocks defy Trump fears, eye new peak
Donald Trump’s victory in the US elections was expected to hurt the IT sector, given his stance against immigration and outsourcing. However, IT bulls seem to be having the last laugh, with the gauge tracking technology shares up 7% this month and on the verge of setting a new record. While a strong dollar provides a boost to software firms’ revenues, the bigger driver of renewed interest may be investors seeking the relative safety of defensive sectors in a turbulent market.
Super saver deals add to DMart’s woes
Already under pressure from the growing popularity of rapid commerce, value retailer DMart faces further challenges. Zepto’s new ‘Super Saver’ feature offers low prices on orders of 999 rupees ($11.829) or more, combining speed with value. According to Kotak Securities, this spells trouble not just for DMart but also for Zomato, which may be forced to match these discounts. With rival Swiggy recently raising funds, competition in the quick commerce space remains intense, setting the stage for a prolonged war of attrition among players. The drop in DMart’s shares to a 15-month low reflect these concerns.
Analysts actions:
- Prince Pipes Cut to Neutral at Goldman; PT 480 rupees
- Hero MotoCorp Raised to Buy at ULJK; PT 5,476 rupees
- Mphasis Cut to Hold at Indsec Securities & Finance
Three great reads from Bloomberg today:
- Adani Charges to Test Trump’s Desire to Keep India in US Orbit
- Bond Market Halts Brutal Run as Buyers Pounce on 4.5% Yields
- Big Take: Amazon Seeks to Rival Nvidia With Its Own AI Chips
And, finally..
Relentless selling by foreign investors may have driven the rupee to record lows, but the currency has shown resilience based on a key metric. The rupee’s implied volatility — a gauge of market expectations of future price swings — has trended lower than that of other EM currencies. That’s because of the central bank’s firm stand against exchange rate turbulence. Proof of this is visible in the largest-ever weekly decline in the RBI’s foreign exchange reserves, published Friday.
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--With assistance from Bhaskar Dutta, Alex Gabriel Simon, Chiranjivi Chakraborty and Kartik Goyal.
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