(Bloomberg) -- Before the trading day starts we bring you a digest of the key news and events that are likely to move markets.
Good morning and happy Friday! This is Ashutosh, an equities reporter in Mumbai. The stock market is expected to kick off the day on a positive note, driven by software companies following TCS’s results that beat analysts expectations. Another major IT player, HCL Tech, is due to report today. Market participants will be also be keeping a close eye on economic indicators, including factory output and retail inflation data, coming later today.
TCS earnings beat indicates tech spending rebound
Tata Consultancy Services Ltd.’s earnings slightly exceeded estimates, while also showing a net headcount increase after three straight quarters of declines. Investors are seeing an early signs of a recovery in discretionary tech spending. This optimism is reflected in the US-listed shares of Infosys, which jumped as much as 2.7% overnight.
Adani’s chemical firm acquisition may spark sector interest
Chemical stocks in India have been a mixed bag. While a few MNC-backed firms like BASF’s local unit have rallied this year, major domestic players such as SRF and Tata Chemicals have struggled. On Thursday, Adani Group’s JV announced the acquisition of a privately-held surfactant maker, stating that the specialty chemicals market offers a significant opportunity across diverse sectors. This could rekindle investor interest in some of smaller players.
Midcaps approach a historic milestone amid valuation warnings
India’s midcap companies are nearing a historic milestone, with the 136-stock BSE Midcap index approaching $1 trillion in market value, about 20% of the nation’s total. Combined with the $1 trillion market value of small-cap companies, excitement around these stocks is high. However, as valuations become frothier and earnings momentum slows, my colleague Chiranjivi Chakraborty wonders if investors would heed the hype or listen to reason.
Analysts actions:
- Kaynes Technology India Cut to Reduce at HDFC Securities
- V-Guard Cut to Reduce at HDFC Securities; PT 410 rupees
Three great reads from Bloomberg today:
- India Firms Show Weather, Vote Impact: Asia Earnings Week Ahead
- Saudi Prince’s Trillion-Dollar Makeover Faces Funding Cutbacks
- For Wealthy Travelers, Asia Is the Hot New Destination
And, finally..
Industrial stocks have been at the forefront of the record rally in Indian equities, benefiting from the government’s push to boost domestic manufacturing. However, the torrent of cash flowing into this space has driven extreme valuation premiums in capital goods, aerospace and defense stocks compared to global peer, notes Bloomberg Intelligence Strategist Nitin Chanduka. The market value of the nation’s construction and machinery sector has reached $425 billion, surpassing Germany and Korea, despite having only one-third of their aggregate sales and EBITDA.
--With assistance from Alex Gabriel Simon and Chiranjivi Chakraborty.
©2024 Bloomberg L.P.
