(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:
- Rural economy stress is waning
- Delivery firms set for $78 billion boom
- Better outlook for cement prices
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Asian stocks are a sea of red this morning, mirroring the risk-off mood sparked by Nvidia’s historic rout overnight. That will likely put the brakes on the Nifty’s 14-day winning run that’s lifted the benchmark to a series of record highs in recent days. Traders now hope that local institutions will wade in to save the day yet again.
Rural recovery lifts consumer stocks outlook
The weakness in India’s rural economy since the dark days of the pandemic is easing. Demand for the rural employment plan, which guarantees 100 days for unskilled workers, is cooling. This indicates that people are finding better-paying jobs elsewhere and may have more to spend. It’s no surprise that stocks like Hindustan Unilever, Dabur India and Colgate-Palmolive closed higher on Tuesday. With a strong monsoon and cash payouts by some state governments ahead of elections, the prospects for consumer companies looks brighter.
Zomato’s Blinkit and rivals target $78 billion market
Ultra-fast delivery businesses are set for explosive growth. According to CLSA, three of India’s largest quick commerce firms, including Zomato’s Blinkit, could reach $10 billion in gross orders in two years and $78 billion within a decade. These companies are reshaping the country’s retail supply chain, boosting visibility and price competitiveness for new brands. This shift could potentially pressure existing consumer-product majors like Hindustan Unilever and Marico, according to the brokerage.
Better outlook for cement prices after M&A wave
The cement sector has witnessed heightened M&A activity recently thanks to the intensifying competition between India’s largest conglomerates, Adani and Birla Groups. Surprisingly, this fervor hasn’t extended to cement prices, which have dropped about 5% this year. With the heavy monsoon season ending, cement prices saw a small increase in August. Jefferies has a buy recommendation on Ultratech Cement, Ambuja and ACC, some of India’s largest manufacturers.
Analysts actions:
- Titan Co Rated New Buy at Asian Markets; PT 4,285 rupees
- Kalyan Jewellers Rated New Buy at Asian Markets; PT 743 rupees
Three great reads from Bloomberg today:
- Adani Enterprises Kicks Off First Bond Sale Aimed at Individuals
- Nvidia Antitrust Probe Escalates, Worsening $279 Billion Selloff
- India Needs More Lending — But Not to Everyone: Mihir Sharma
And, finally..
Some bond fund managers, including those running short-duration funds, are extending duration to maximize returns ahead of anticipated rate cuts. For example, Anju Chhajer of Nippon Life India Asset Management is buying longer-term debt to benefit from capital gains and lower reinvestment risks when interest rates fall. This shift highlights how investors are adapting to the anticipated monetary policy easing and declining rates.
--With assistance from Chiranjivi Chakraborty and Ashutosh Joshi.
©2024 Bloomberg L.P.
