Indian Traders See Santa Rally as Foreigners Return

(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:

Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. Nifty futures indicate a flat start despite gains in Asian markets this morning. The local market has so far looked past the rupee’s decline to a new record low. A recent reversal in foreign fund outflows offers some respite to the currency and the stock markets. A bigger worry though, is the slowing economy, which could further hurt corporate earnings. A rate cut by the central bank may not be enough to fix it.

Traders position for Christmas rally

A resumption in foreign inflows and rising wagers for an interest-rate cut are fueling optimism in the stock market after two months of declines. Local shares climbed on Monday, with seasonal trends also suggesting a potential year-end rally. December has historically been one of the strongest months for Indian equities over the last five years, data compiled by Bloomberg show. While foreign outflows and slowing earnings growth have dampened sentiment, the still strong 15% profit growth projections for MSCI India for 2025 point to a solid year for investors.

Cement price hikes a much-needed boost

Cement stocks ripped higher on Thursday, with signs that the rally may extend into the year-end. The catalyst is an anticipated improvement in demand for the building material, with Antique Stock Broking flagging that October-November volumes climbed in high single-digit. The next potential trigger is price hikes, with market leader UltraTech leading the way. Prices are still 10% lower from last year, which means companies can implement several hikes going ahead as demand picks up, buoyed by resumption in government spending. 

Prolonged pain for road builders 

Minimal increases in capital expenditure for the ongoing fiscal year has added to the pessimism on the road sector. Recent data on the National Highway Authority’s construction activity has also been underwhelming. Analysts at Nuvama remain cautious, expecting the government to focus on reducing NHAI’s debt. They also cite intense competition for projects as a concern, a factor reflected in the underperformance of leading players IRB Infrastructure and GR Infraprojects, which have declined this quarter.

Analysts actions:

Three great reads from Bloomberg today:

And, finally.. 

The Nifty index has rallied to a one-month high amid bets of interest-rate cut, but the upswing is on a weak footing. On Thursday, the gauge’s 50-day moving average closed below the 100-day average for the first time since December. This suggests that despite growing optimism about the RBI announcing easing measures in its policy review this Friday, the bearish undertone may persist. 

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--With assistance from Ashutosh Joshi, Alex Gabriel Simon and Kartik Goyal.

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