(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:
- Steelmakers may get boost
- Earnings set to recover
- Tax headache for automakers
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. The Nifty closed in the green for a third session, with local institutional investors continuing their buying spree for the 11th straight day — the longest streak since mid-May. As global markets shift back to risk-on sentiment, this momentum could propel the Nifty toward reclaiming the 25,000 mark in the near term. Looking ahead, investors will be closely monitoring the minutes from the Federal Reserve’s July policy meeting and Chair Jerome Powell’s speech at the Jackson Hole Symposium on Aug. 23.
Anti-dumping probe could boost steelmakers’ shares
Steelmakers’ shares are likely to strengthen as the government considers more protective measures. India’s trade authority has launched an investigation into Vietnam’s alleged dumping of steel products, and with China’s overcapacity already a global concern, there’s speculation the probe could extend to Chinese exports. This would support local prices and benefit producers like Tata Steel, Jindal Stainless and JSW Steel, while also offering relief from the impact of the Supreme Court’s recent verdict on past mining royalties.
Brighter days ahead: earnings growth set to pick up
A lackluster first-quarter earnings may give way to faster growth in the coming quarters, as the rural economy gains momentum, analysts say. Despite over half of the companies in the NSE Nifty 50 Index missing analyst estimates in the June quarter — a period marked by weeks-long national elections and a severe heat wave that curtailed spending — strategists remain optimistic about full-year growth. A rebound in the earnings momentum could be the catalyst Indian equities need after underperforming Asian peers this month.
Tax headache for Maruti Suzuki, Bajaj Auto after budget changes
The budget surprised investors by changing capital gains tax rules on mutual fund investments. These tweaks have now affected some of India’s biggest companies investing in various asset classes, including debt funds. Yesterday, Bajaj Auto announced an increase in provision for deferred tax by 2.11 billion rupees, just days after carmaker Maruti Suzuki India’s decision to set aside 8.5 billion rupees for the one-off tax impact due to the withdrawal of the indexation benefit on long-term gains from debt funds bought before April 1, 2023.
Analysts actions:
- Bayer CropScience Raised to Buy at Elara Secs India
- CRISIL Raised to Add at IIFL; PT 4,764 rupees
- Suprajit Eng Cut to Add at HDFC Securities; PT 576 rupees
Three great reads from Bloomberg today:
- India’s Patra Says Early Easing to Push Inflation Out of Control
- Adani Group Touts Cash Pile to Ease Hindenburg-Fueled Concerns
- Asian Stocks Echo Wall Street’s Rise on Fed Bets: Markets Wrap
And, finally..
Traders are running out of reasons to buy sovereign bonds, as most factors seem to be priced in already. What’s more, benchmark 10-year yields are approaching a technical support line that has remained intact since the pandemic. Given that the spread between 10-year yields and the RBI’s policy repo rate is also down to its lowest in seven years, many are opting to hold off on taking bullish positions until the central bank actually cut interest rates.
--With assistance from Chiranjivi Chakraborty.
©2024 Bloomberg L.P.
