(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:
- Lower oil may boost stocks
- Tire makers set for good days
- Second-half borrowings
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Nifty futures signal a positive start this morning, tracking gains in Asian markets, after the index scaled 26,000 mark on Wednesday. It is pouring money in the stock market and water in the financial capital Mumbai, which got hit by another bout of heavy rains last evening, and left many parts of the city flooded. Sentiment is likely to remain upbeat as lower oil prices may help boost the nation’s finances and also keep inflation in check.
An ideal (f)oil for stretched valuations
Indian stocks have historically outpaced other emerging markets during prolonged declines in crude oil prices, as well as during shorter correction phases, according to Elara Securities. That should be a good reason for bulls to keep bidding up prices, even amid warning signs about stretched valuations. A sustained 1% dip in oil prices could hasten domestic growth by about 3.5 basis points and reduce consumer prices by the same margin, Elara notes.
Tire makers set for growth
The outlook on automakers’ stocks has soured due to rising inventory, but the sentiment around tire companies remains bullish. IIFL Securities expects margin pressures for producers like Apollo Tyres, CEAT and JK Tyre & Industries to ease by the end of this quarter. The brokerage expects their earnings to grow at a 20% compounded rate over the next three years, following a lukewarm performance last year. All three stocks saw gains on Wednesday, bucking the overall weakness in midcap stocks.
All eyes on the government’s borrowing plan
Bond bulls are keenly awaiting the government’s second-half borrowing announcement, expected on Thursday. While the annual target of 14.01 trillion rupees ($168 billion) is likely to stay the same, traders will be watching closely for details like the size of long- and short-term debt. Any unexpected good news may add fuel to the current rally, which has gained momentum thanks to the global debt index inclusion and hopes of a rate cut from the RBI, especially after the recent move by the Federal Reserve.
Analysts actions:
- Trent Rated New Buy at Citi; PT 9,250 rupees
- Alembic Pharma Raised to Hold at HSBC; PT 1,130 rupees
- Coforge Cut to Sell at Axis Capital Limited; PT 6,000 rupees
Three great reads from Bloomberg today:
- China Weighs Injecting $142 Billion of Capital Into Top Banks
- OpenAI Discusses Giving Altman 7% Stake in For-Profit Shift
- Big Take: Brazil’s $523 Billion Farm Boom Erases Ancient Society
And, finally..
Sales of securitized assets are poised to hit a record 2.1 trillion rupees ($25.1 billion) this financial year, as banks trim their loan book amid sluggish deposit growth, according to ICRA Ratings. The RBI’s push for banks to correct their credit-to-deposit ratio is likely a major driver behind the surge.
--With assistance from Chiranjivi Chakraborty and Alex Gabriel Simon.
©2024 Bloomberg L.P.
