(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:
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Indian equities seem set for a muted start despite global markets buzzing with excitement over potential Fed rate cuts. Last week, the benchmark indexes wrapped up their second consecutive week of gains, but things might be a bit more subdued this time around, with the additional US tariffs set to kick in on Wednesday. Besides, the local bond market’s recent selloff could mean higher borrowing costs for companies, keeping investors on their toes. This week, all eyes will be on information technology shares, first-quarter GDP data and sovereign bonds.
Indigo boards Nifty as Crisil warns of turbulence
The inclusion of InterGlobe Aviation, which operates IndiGo, in the benchmark index comes after the stock has already soared by more than a third this year. Little surprise then that 20 out of 25 analysts tracking it have a ‘buy’ call. But Crisil Ratings has a word of caution. The combined operating profits of the leading players — IndiGo, Air India and SpiceJet — could fall by as much as 14% in the year through March, the rating company has said. Low fuel costs may ease the pain, but only to an extent, the analysts note. That said, passenger traffic is still expected to climb 7%-9% higher over last year, a sign Indians are in no mood to stay grounded.
Strong housing pre-sales fail to lift realty stocks
Listed developers posted their best-ever quarter. Pre-sales in April-June jumped 45% on-year to 432 billion rupees ($4.9 billion), according to Kotak Securities. Yet, the stock market doesn’t seem impressed. Real estate shares remain among the laggards on the Nifty this year, weighed down by signs of cooling demand. Kotak notes that while the broader industry did see some growth — sales were up 9% over last year — volumes actually declined 4%, making for a muted start to the new fiscal. The problem lies in the rich valuations. Investors are asking if high stock prices are justified when sales aren’t growing fast enough.
One hurdle less for IDBI Bank divestment
In a move that takes IDBI Bank closer to its long-awaited divestment, the government has allowed Life Insurance Corp.’s stake to be classified as public shareholding. India is looking to call financial bids for the lender by the end of this year. Strong profits, stable asset quality, and national reach make the lender attractive to potential bidders. Success here could set the stage for broader asset monetization across state-owned firms, particularly land holdings.
Three great reads from Bloomberg today:
In bonds, investor sentiment has flipped. The 10-year yield now sits more than 100 basis points above the RBI’s policy rate, the widest gap in two years, as pension funds and insurers dial back purchases and fund managers cut duration after recent losses. The selloff threatens to raise borrowing costs even as the central bank’s 100 basis points of cuts struggle to revive growth, and comes as looming US tariffs risk shaving up to 1% off gross domestic product.
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–With assistance from Subhadip Sircar, Ashutosh Joshi and Chiranjivi Chakraborty.
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