(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:
- Analyst back Reliance
- Adani’s domino effect
- FMCG consumption woes
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. As winter sets in over the financial capital, traders are hoping to avoid a metaphorical one in the stock market. Nifty futures are trading flat, in line with the subdued mood in Asia this morning. Adani stocks will remain in focus, with the flagship at a one-year low. Meanwhile, analysts increasingly betting on Reliance Industries to break its streak of underperformance.
Analysts back Reliance Industries’ comeback
Analysts at Citigroup Inc. and Jefferies Financial Services Group are making a strong case for a rebound in Reliance Industries’ shares. Citi upgraded the stock to ‘buy’ last week, while Jefferies on Tuesday said the risk-reward is compelling. The stock has slid about 20% from its all-time high in July, and both brokerages note that investors have rarely lost money when buying at these valuation levels. Additionally, the stock’s performance is critical for the Nifty to overcome key resistance levels on the charts. At present, around 85% of the 39 analysts tracking Reliance have a buy rating on the stock — the highest this year.
Adani Group faces domino effect of bribery fallout
Shares of Adani’s flagship hit a new one-year low, erasing a recent rebound, as the ripple effects of the bribery charges against the billionaire founder begin to take hold. With several of the group’s firms receiving negative outlooks from the three main rating agencies — S&P, Fitch and Moody’s — securing funds may get difficult. The current problems are viewed as more serious than the Hindenburg crisis of early 2023, and investors will keep a close eye on the group’s efforts to manage the fallout. The recent meltdown in the shares of the 10 Adani companies has taken the total market value loss to $100 billion, extending losses since the rally ahead of India’s election results in early June.
Investors optimistic about consumption despite FMCG woes
The Nifty FMCG index gained for the third straight session on Tuesday, marking gains in five of the last six sessions. However, the on-ground situation does not look promising. According to Antique, demand stayed weak in October, with the festive season failing to excite consumers. Additionally, the delay in the winter season has resulted in lower-than-expected stocking of winter products. Antique’s top picks include Godrej Consumer Products and Marico in staples, and United Spirits and Radico Khaitan in alcoholic beverages.
Analysts actions:
- Coal India Rated New Overweight at Morgan Stanley; PT 525 rupees
- Emcure Pharma Raised to Buy at Kotak Securities; PT 1,680 rupees
- L & T Finance Raised to Add at Kotak Securities; PT 160 rupees
Three great reads from Bloomberg today:
- NTPC Green’s $1.2 Billion Listing to Test Demand for Renewables
- Trump Heralds Unease in Global Halls of Power With Tariff Threat
- Big Take: The ‘Quant Olympics’ for Wannabe Hedge Fund Traders
And, finally..
Domestic investors have poured more than $70 billion into local stocks this year through October, putting inflows on pace for an annual record, even as global funds continue to retreat. Retail investors, including non-residents, have bought almost $17 billion worth of shares on the NSE. A large portion of this liquidity has been absorbed by a steady stream of IPOs and share sales by founders.
To read India Markets Buzz every day, follow Bloomberg India on WhatsApp. Sign up here.
--With assistance from Alex Gabriel Simon, Chiranjivi Chakraborty and Kartik Goyal.
©2024 Bloomberg L.P.