(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:
- Bangladesh turmoil impact
- Consumer stocks shine
- Rupee, bonds immune to rout
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Nifty futures are set for a relief rally this morning, tracking the sharp rebound in Asian markets. Domestic money appears willing to take the equities meltdown as just one more opportunity to load up. That said, traders expect volatility to persist as the full impact of the multiple global headwinds that sparked the rout has yet to be fully absorbed.
Bangladesh turmoil could impact Indian businesses
The deadly protests in Bangladesh that toppled Prime Minister Sheikh Hasina might spell trouble for some Indian companies. Exporters to the neighboring nation are already dealing with foreign exchange shortages and supply chain issues at the border. Many Indian firms, including consumer giant Marico and Asian Paints get a sizable chunk of their revenues from the country and could face problems if things don’t improve soon. A Bangladeshi unit of Life Insurance Corp. of India has paused operations from Aug. 5 to Aug. 7 because the clashes.
Consumer stocks shine despite market slump
With rising geo-political tensions and a selloff in risk assets, investors are turning to consumer stocks for safety. Even though the market had its worst day in two months, shares of companies like Hindustan Unilever, Nestle India, Dabur and Marico traded higher. These stocks have been gaining momentum and there’s a good chance they could go higher, with abundant rain helping farmers plant more rice and pulses.
Rupee, bonds withstand global market meltdown
India’s bond market and currency are proving to be quite insulated from the maelstrom sweeping global markets. The 10-year bond yields fell three basis points to 6.86% Monday, while Treasury yields of equivalent tenor saw intraday swings of over 15 basis points. The rupee too traded relatively steady, dropping just 0.1% against the dollar, compared to much more dramatic unwinds in emerging market peers.
Analysts actions:
- Hindalco Cut to Reduce at Kotak Securities; PT 650 rupees
- Kalpataru Projects Cut to Hold at Indsec Securities & Finance
- Tata Motors Cut to Hold at ICICIdirect.com; PT 1,200 rupees
Three great reads from Bloomberg today:
- Big Take: $6.4 Trillion Rout Sows Fear ‘Great Unwind’ Has Begun
- Adani Ports Seeks More Global Footholds to Challenge China Might
- An Emergency Fed Rate Cut Would Be A Mistake: Marcus Ashworth
And, finally..
Local institutions have once again emerged as the biggest dip buyers in India. When the global market rout hit risk assets worldwide, mutual funds poured in over $1 billion into domestic equities. Meanwhile, foreigners sold $1.2 billion of shares, according to provisional data. This is the second time this year that domestic buyers have invested more than $1 billion in a single day. The last time this happened was in March when small- and mid-cap shares took a hit due to regulatory concerns over their valuations.
--With assistance from Ronojoy Mazumdar.
©2024 Bloomberg L.P.
