(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 Chiranjivi Chakraborty, an equities reporter in Mumbai. Local shares are set to extend their lackluster performance, with Nifty futures indicating subdued opening. Thin volumes and renewed foreign fund selling are adding to the dour mood. However, a report about the government mulling a potential reduction in individual income tax may provide some support. That said, the 200-day moving average remains a tough hurdle to overcome.
Software bulls nervy ahead of earnings
Traders are locking in profits from software exporters ahead of the third-quarter earnings season. The sector has been a rare bright spot during the recent market selloff, with the Nifty IT index set for its third straight quarter of gains. Even so, some analysts caution that valuations are looking stretched, as a runaway growth in revenue seems unlikely in the near term. This has led some investors to trim their positions, hedging against the possibility that a single disappointing earnings report could sour the mood for the entire sector.
Optimism for hotel stocks faces room supply test
A key driver of optimism for hospitality stocks has been the view that demand will continue to outstrip supply in the near future. However, this dynamic may be about to change. Rating agency CRISIL notes that the pace of room additions, which has increased since last fiscal year, is expected to gain even more momentum. It sees supply increasing cumulatively by about 20% over this fiscal and the next. Despite this, Kotak Institutional Equities believes better margins and faster- expected growth for managed properties warrant higher earnings multiple for branded hospitality players such as Indian Hotels Co. and Lemon Tree. Indian Hotels’ shares have gained almost 100% this year.
Ikigai eyes silver linings in cement’s struggles
The cement sector has trailed most others in 2024, as rampant capacity addition has depressed prices. However, Ikigai Asset Manager has reasons for optimism. The building material remains one of the least vulnerable traditional sectors to disruption, it says in a report. Additionally, there hasn’t been much equity dilution, with cash flows and strong balance sheets supporting the industry. While margins have been weak for some time, Ikigai is betting on a reversion to mean profitability, cost reductions from a higher share of green energy in the mix, and larger players faring better than their smaller counterparts.
Three great reads from Bloomberg today:
The ‘Santa Claus Rally’ has skipped India’s stock market, with the 200-day moving average acting as a Grinch. The Nifty 50 made its third attempt this week to close above the key resistance level. The failure underlines the lack of confidence among traders amid lingering concern over company earnings, domestic consumption, and potential ripple effects of President-elect Donald Trump’s trade policies on global markets.
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–With assistance from Kartik Goyal and Ashutosh Joshi.
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