India Stock Bulls Pin Hopes on Earnings as Market Selloff Deepens Pratigya Vajpayee Easing valuations have done little to revive investor appetite. Good morning... I’m Pratigya Vajpayee in Mumbai, where everyone seems to be counting on the upcoming earnings season to stem the selloff in equities.
The Nifty 50 fell to its lowest level in almost six months on Monday, breaking below 23,000 as a weak rupee, expensive crude and persistent foreign selling continued to weigh on sentiment. Asian stocks have edged lower in early Tuesday trading, Brent crude is above $106 a barrel, and the yield on benchmark 10-year Treasuries jumped to a fresh 19-year high in the US session — making for a challenging global backdrop. Amid the gloom, Indian investors are hoping that the soon-to-start second-quarter results season will bring some relief for a market that has deepened its underperformance relative to global peers in September, especially as valuations have eased from their peaks.
However, costly crude and rising bond yields are among the factors that are keeping investors cautious. Meanwhile, Adani stocks could see some action after the market regulator settled proceedings against four group companies and individuals including billionaire Gautam Adani over alleged noncompliance with minimum public shareholding requirements. This comes just days after the group settled a separate probe that stemmed from former US short seller Hindenburg Research’s accusations, further easing regulatory overhang for the ports-to-power conglomerate.
In today’s newsletter, we write about: The latest data from India’s central bank show that it bought a record $18.7 billion in July, when foreign inflows were picking up and sentiment toward the rupee was improving following the measures it announced to attract capital. The purchases weighed on the currency, leaving it trailing most Asian peers, and spurred bets that the RBI would use periods of rupee strength to rebuild reserves. The dynamics have changed notably since then.
India’s forex reserves fell by the most in almost two years in the week through Sept. 18 as the RBI sold dollars to support the rupee, which has come under renewed pressure from higher oil prices and capital outflows. IT companies 2Q earnings likely to be soft: JM Financial Don’t look to earnings from India’s large IT companies to turn around the stocks malaise — they’re heading into another subdued quarter, according to JM Financial. The brokerage sees little improvement in demand, while AI-driven productivity gains and tougher competition continue to put pressure on growth.
Margins, too, are unlikely to see any significant improvement. The brokerage recommends a selective approach and favors companies with better earnings visibility. Its preferred bets are Tech Mahindra, TCS and Infosys.
It is bearish on HCL Tech, Wipro and LT Mindtree. NSE shares drop below IPO price amid broad selloff Shares of the National Stock Exchange of India slipped below their IPO price on Monday, their third day of trading, fitting a familiar pattern of weak early performance for some of the country’s biggest listings. The move came amid a broader selloff that weighed on Indian equities.
Hyundai Motor India, whose $3.3 billion IPO was the country’s largest ever, fell more than 7% on debut in 2024. LIC had an even weaker start after its $2.7 billion offering in 2022, while Paytm lost about a quarter of its value on its first day. That said, the early decline may not dent NSE’s longer-term prospects, given also that several large IPOs that stumbled initially went on to recover in the years that followed.
Competition in the affordable housing finance space India’s affordable housing finance market still has room to grow, but the easy gains may be fading, according to Systematix. Specialist lenders remain strongest in loans of about 1 million to 1.5 million rupees, where many borrowers earn in cash and require more hands-on checks. Competition is increasing, especial...