(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:
- Strong fourth quarter in sight
- Auto shares in focus
- No relief for sugar stocks
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Indian stocks look set to extend gains on Friday, tracking advances in Asian markets riding high on China’s latest stimulus measures and the momentum in US equities. If history is any guide, stocks could be headed for another quarter of strong gains.
Stocks primed for a strong finish to 2024
India’s equity benchmarks are on course for the sixth straight quarter of gains, the longest such streak since 2021. Odds appear to favor seven in a row considering that benchmarks have risen nearly 5% on average during the fourth quarter of the calendar, over the past two decades. The case for a bull run appears strong amid weak crude oil prices and hopes of the RBI cutting interest rates shortly.
Policy support can drive auto shares higher
Stocks of Maruti Suzuki and other automakers jumped on Wednesday on a report that Karnataka may offer tax incentives for electric vehicle makers. Slowing demand remains a concern, but traders are betting on strong festive season sales. Besides, they are hoping that a bumper listing of the upcoming Hyundai IPO could rub off on rival auto stocks as well. The second bet could turn out to be tricky, considering that Bajaj Housing Finance’s recent IPO did not spell cheer for all home finance stocks.
No sweet story for sugar stocks
Plentiful rains across the county augur well for sugarcane production, but not necessarily for sugar mills. A part of the sugar has to be set aside for ethanol production as per government rules, and that is weighing on shares of bigger players like Bajaj Hindustan and Shree Renuka Sugars. Both stocks are down about 10% from their recent peaks. Analysts at Incred expect further downside for the sector amid low domestic sugar prices, a ban on exports and demand for higher cane prices from farmers in states such as Uttar Pradesh.
Analysts actions:
- JB Chemicals Rated New Buy at JM Financial; PT 2,210 rupees
- Jindal Stainless Rated New Buy at JM Financial; PT 910 rupees
- Whirlpool India Raised to Buy at Avendus Spark; PT 2,634 rupees
Three great reads from Bloomberg today:
- China Cuts Key Rate, Frees Up Cash for Banks to Spur Growth
- Stock Market’s ‘Goldilocks Zone’ Is in Danger of an Abrupt End
- Big Take: Harris Holds Razor-Thin Swing-State Lead in Tight Race
And, finally..
Investors seem to have fallen out of love with shares of state-run lenders. Nifty’s gauge of public-sector banks is down by more than 8% for the quarter, and is set for its first quarterly decline since March 2023. Investors are taking some money off the table as lenders appear to be under pressure amid dwindling deposits and worries over asset quality. But there is hope. Seasonality analysis shows the gauge has delivered an average return of 15% for the final quarter of the calendar year, putting it among the best-performing sectors for the three months through December.
--With assistance from Chiranjivi Chakraborty and Alex Gabriel Simon.
©2024 Bloomberg L.P.
