(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:
- ICICI Bank’s standout earnings
- Circular economy winners
- Bond bulls snap up long bonds
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Traders are gearing up for a busy week with key central bank decisions and big US tech earnings. While these events may stir up some volatility, Indian equities are expected to keep riding the bullish wave that helped the Nifty cap its eighth week of gains on Friday — its longest run in six years. Even foreigners have got back in the game after three days of selling, as the effects of the recent budget’s tax hike on stocks began to fade.
Rerating likely as ICICI Bank’s earning stand out
ICICI Bank’s earnings on the weekend came as a pleasant surprise, especially since many of its competitors reported slow deposit growth and worsening asset quality due to rising delinquencies. ICICI, however, posted higher-than-expected profit and a lower proportion of gross non-performing assets in the June quarter. This standout performance has led brokerages like Nuvama to argue that ICICI’s premium valuation to its peers should increase even more.
Rally in circular economy winners can extend
Shares of companies benefiting from the circular economy are seeing a big boost from India’s recent budget. The government put a strong focus on raising local production and recycling critical minerals. Water recycling is also getting a similar push, with support for projects like solid waste management. Some big winners include Antony Waste, which surged almost 50% last week, and Gravita India, which climbed 30%. Analysts are optimistic that the gains will extend as the government keeps emphasizing growth in these sectors.
30-year bonds: the new focus for India’s bond bulls
Some of India’s top bond fund managers are taking an interesting approach by buying bonds with 30-year maturities. They believe that the nation’s improving economic fundamentals will lead to a structural slide in policy rates. The strategy is based on the idea that the era of excessive government spending and large current account deficits is coming to an end. This approach is quite different from what’s happening in other markets, where investors are betting on rate cuts and a return to a normal yield curve by focusing on shorter-term debt and selling longer bonds.
Analysts actions:
- Adani Green Rated New Buy at Jefferies; PT 2,130 rupees
- Amber Enterprises Raised to Hold at BOB Capital Markets
- Raised to Accumulate at Dolat Capital
- Ashok Leyland Cut to Hold at Asian Markets; PT 250 rupees
- Raised to Buy at Anand Rathi Securities
- Cipla Cut to Add at ICICI Securities; PT 1,700 rupees
- Dr Reddy’s Cut to Reduce at ICICI Securities; PT 6,350 rupees
- IndusInd Bank Raised to Buy at Dolat Capital; PT 1,800 rupees
- Mahanagar Gas Cut to Hold at BOB Capital Markets
- Cut to Sell at Phillip Secs; PT 1,555 rupees
- Mphasis Cut to Reduce at Dolat Capital; PT 2,760 rupees
- TTK Prestige Cut to Hold at ICICI Securities; PT 900 rupees
Three great reads from Bloomberg today:
- Billionaire Battle Heats Up as Adani Challenges Birla in Cement
- India’s Sneakerheads Trade Air Jordans in Booming Resale Market
- A New Wave of Electric Vehicles Are Ready to Charge at 70 MPH
And, finally..
Last week, the MSCI’s India Index outperformed other Asian stocks by the widest margin since March 2022. While the nation’s stocks rose nearly 2% for the week, the broader Asia gauge dropped about 2.5% due to to an AI-led selloff. This strong performance, even with a capital gains tax hike, shows that optimism about India’s prospects remains high.
--With assistance from Ashutosh Joshi, Chiranjivi Chakraborty and Subhadip Sircar.
©2024 Bloomberg L.P.
