(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:
- BSE on the rise
- Consumer stocks under pressure
- RBI rate cuts in focus
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. It’s Friday and traders will simply be glad to see the back of a rough week that’s put the benchmark Nifty index on track for its biggest weekly decline in over two years. While sentiment remains fragile amid the Middle East tensions, investors are taking solace from the fact domestic institutions are not letting go of any market dip.
Silver lining for BSE amid SEBI’s options curbs
Shares of BSE and brokerage Angel One bucked Thursday’s selloff despite concerns that their earnings may take a hit from SEBI’s latest curbs on options trading. Premium turnover — the main driver of profits for exchanges and brokers — has been stagnant over the last year, even as number of contracts traded continues to rise. Analysts predict that options trading volumes may fall by about a third, but some market participants expect part of the volume from the discontinued weekly contracts on the NSE to spillover to the BSE, providing a potential silver lining.
Consumer staples turnaround in doubt
The nascent recovery in consumer staples stocks appears to be under threat after Dabur’s surprisingly weak quarterly update. Now, all eyes are on upcoming reports from peers like Hindustan Unilever, Nestle India, and Britannia, before investors decide their next move. According to Jefferies, demand trends remain weak, and they warn that stock prices could take a hit unless the management commentary for the second half of the year shows improvement.
Nomura says odds favor RBI cutting rates
While most expect the central bank to stand pat for the 10th straight meeting next week, Nomura Holdings has a contrarian view. It sees a 55% probability of a 25 basis points cut due to slowing growth and weakening loan demand. With real rates remaining high, the RBI has some room to “recalibrate policy settings without stoking inflation,” according to the firm. A rate cut may extend the rally in bonds, already among Asia’s top performers this year.
Analysts actions:
- GAIL India Rated New Sell at Axis Capital Limited; PT 185 rupees
- Torrent Pharma Raised to Buy at Centrum Broking; PT 3,350 rupees
- Lal PathLabs Raised to Buy at Centrum Broking; PT 3,550 rupees
Three great reads from Bloomberg today:
- China’s Stock Boom May Turn to Bust as in 2015, Nomura Warns
- Zuckerberg Passes Bezos to Become World’s Second-Richest Person
- Big Take: Goldman Prodigy Struggles to Join the Hedge Fund Elite
And, finally..
Once again, India’s institutional investors jumped on Thursday’s market selloff — the biggest since August — as an opportunity to put their cash reserves to work. They lapped up $1.53 billion of shares, setting a new record, soaking up most of the $1.8 billion in stocks that foreign investors dumped, according to provisional data. This marks the third time this year that domestic buyers have poured more than $1 billion into the market in a single day. The last time this happened was back in August, during the global market rout that rattled risk assets globally.
--With assistance from Ashutosh Joshi, Alex Gabriel Simon and Kartik Goyal.
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