Market News
Weak Rupee Makes Indian Stocks a Tough Sell - BLOOMBERG
(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:
- Rupee impact
- Tiny IPOs
- Paint stocks fade
Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. It looks like another lacklustre session ahead with Nifty futures pointing to a flat start. Key Asian markets are mostly lower this morning and that could keep bulls in India on the backfoot. The focus will shift to third quarter earnings season over the next few days.
Rupee’s weakness makes stocks a hard sell
The rupee’s continued slide to record lows is making Indian shares less appealing to foreign investors in the near term. The currency is in a free-fall after breaching the 85-per-dollar mark, and now in danger of crossing the 86 level. The weakness impacts overseas investors calculating their returns in dollar terms. The problem is compounded if stock market returns remain mediocre. The Nifty Dollar Total Return index is up just 8% for 2024, trailing the Nifty’s roughly 10% gains in rupee terms.
Small IPO craze cools off
The regulatory crackdown on tiny companies by SEBI and the BSE seems to be having an impact. On Friday, of the six initial public offerings that debuted, only one — Newmalayalam Steel, a 417 million rupee ($4.9 million) issue — ended in the red. This is in contrast to the enthusiastic reception tiny companies’ offerings enjoyed just weeks ago. With two IPOs — Trafiksol ITS Technologies and Solar91 Cleantech —deferred abruptly, and trading in Bharat Global Developers suspended over fake disclosures, the risk-reward ratio now appears less favorable. Especially amid a more cautious market environment.
Paint stocks may fade in 2025
It’s been a forgettable year for investors in paint companies, and 2025 doesn’t appear to hold much promise either. Despite the sector projected growth of 8-10%, as per rating agency CareEdge, the entry of deep-pocketed players has intensified competition, prompting companies to boost advertising and sales spending to defend market share. This pressure is expected to further narrow operating margins, which have already weakened during the April-September period. Leader Asian Paints is down 32% so far this year and Berger Paints has fallen 26%.
Analysts actions:
- JSW Energy Raised to Buy at ICICI Securities; PT 720 rupees
- Greenply Raised to Add at ICICI Securities; PT 356 rupees
- Aditya Vision Rated New Add at ICICI Securities; PT 560 rupees
Three great reads from Bloomberg today:
- Big Take: Musk‘s growing influence erodes global resistance to Starlink
- China’s record dividend payout intensifies pressure on the yuan
- Nvidia supplier Ibiden weighs faster expansion to meet AI demand
And, finally..
The rupee has sharply weakened alongside peer currencies over the last month, with the local currency shedding 1.2% over the last month as against a 1.3% depreciation in the previous six months. The relentless strength of the dollar and concerns over the impact of potential US tariffs have increased volatility in the rupee, which took just a month-and-a-half to slide from 84 to 85 against the greenback. While the new RBI governor Sanjay Malhotra has not made any public comments about foreign exchange management, traders are wondering if the new central bank chief is shifting away from the previous strategy of damping volatility in the exchange rate
