(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:
- Bank margins
- Bharti’s dominance
- Sugar millers
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Local stocks will likely be in good company, as key Asian markets climb after US stocks hit another record high. A broadly bullish outlook worldwide is outweighing concerns about political instability in South Korea and France. Back home, investors are now focused on Friday’s monetary policy meeting, with traders positioning themselves for potential easing.
CRR cut may cushion bank margins
Bank shares have surged this week amid growing bets for easing measures from the Reserve Bank of India on Friday. While economists remain divided on the odds of a rate cut, Citigroup highlights several reasons for RBI to lower the cash reserve ratio as a step toward easing. The brokerage estimates that a 25-50 basis point cut in the CRR could boost banks’ net interest margin by up to three basis points. Such a move would be sentimentally positive for HDFC Bank, Axis Bank, Federal Bank and Bank of Baroda, according to Citigroup.
Tariff hike cements Bharti Airtel’s telecom lead
Bharti Airtel has rallied more than 50% this year, becoming the best performer on Bloomberg’s global telecom gauge. In India’s oligopolistic telecom market, which initially saw well-funded Bharti and Jio battling to win customers from ailing Vodafone Idea, the Delhi-based firm is now gaining the upper hand. In the latest quarter, accompanied by a round of tariff hikes, Bharti was the only operator to expand its share of industry revenue, while others slipped. Analysts at CLSA project that by 2027, Bharti and Jio will account for 84% of industry revenue, up from about 80% currently.
Maharashtra’s political clarity to boost sugar millers
More than 10 days after the state election results, Maharashtra, the country’s wealthiest state, is set to form a new provincial government. Resolving the leadership uncertainty in the key sugar-producing region bodes well for millers, who have been pushing the federal government to raise the minimum sugar prices and consider similar measures for ethanol. Shares of major players such as Shree Renuka Sugars, Bajaj Hindusthan, and Triveni have declined by over 20% from their peaks, leaving investors hopeful for a rebound.
Analysts actions:
- Ipca Lab Cut to Reduce at YES Research; PT 1,575 rupees
- Sundaram Finance Raised to Buy at Avendus Spark; PT 4,900 rupees
- Dixon Tech India Raised to Outperform at CLSA; PT 18,800 rupees
Three great reads from Bloomberg today:
- Billionaire Poonawalla’s Lender to Double Staff in Growth Blitz
- Fed’s Powell Expects Good Relations With Trump Administration
- Big Take: Macron’s Grand Project in Ruins After Government Falls
And, finally..
The Nifty index has broken above the neckline of an inverted head-and-shoulder pattern, a technical indicator of a potential bullish reversal. This comes after a drop of over 10% from its peak. The recent momentum has brought the gauge close to its crucial 50-day moving average, and a break above this level is likely to further bolster the case for a market recovery. Some asset managers, including Quant Mutual Fund, are seeing the risk-off phase nearing its end as much of the economic slowdown appears to have been priced in.
To read India Markets Buzz every day, follow Bloomberg India on WhatsApp. Sign up here.
--With assistance from Alex Gabriel Simon.
©2024 Bloomberg L.P.