Adani Group Shares Add Almost $20 Billion As Rally Extends

Adani group appears poised to reduce the $60 billion market value gap.

Mumbai:

Asian equities are approaching record highs, buoyed by the overnight technology-driven surge on Wall Street. However, this optimism may not extend to Indian markets, which are still recovering from Monday's decline in local software giants. Attention remains focused on Adani Group shares to determine if their positive momentum can continue into a third session, particularly after prominent investors acquired stakes in the group's power division. Concurrently, traders remain hopeful for advancements in trade negotiations following US Secretary of State Marco Rubio's meeting with his Indian counterpart on Monday, where he emphasized that bilateral relations remain "critically important" despite recent tensions.

IT analysts divided as stocks plummet

Technology stocks lost $10 billion on Monday after President Donald Trump announced substantial new fees for H-1B visa applications, exacerbating what was already a challenging year for the sector. Analysts are split on whether this selloff signals danger or presents an investment opportunity. InCred suggests the fee introduces additional uncertainty during a period of slowing client decision-making. Conversely, Motilal Oswal argues that while on-site revenues may decrease, reduced on-site costs could help maintain profit margins. Nomura views significant corrections as accumulation opportunities, asserting that modifications to the H1B visa program will have minimal impact over the next twelve months.

Income growth more significant for consumer demand: Systematix

Moving from IT sector disruptions to consumer trends, Systematix analysts warn that recent consumption tax reductions may not trigger the anticipated demand recovery. Their reasoning: household income growth, rather than price reductions, more strongly influences consumption patterns. The firm's September Household Situation Tracker indicates persistent income constraints across both urban and rural regions, suggesting that GST rate adjustments will likely have limited near-term effects. Their preferred investments include Allied Blenders, Arvind Fashions, Berger Paints, GCPL, Dodla Dairy, and Marico.

Rising yields impact lower-rated shadow banks more severely

In the financial sector, increasing government bond yields have expanded spreads for non-banking lenders, with AA-rated institutions experiencing more pronounced effects. Nevertheless, there's a positive aspect: funding costs for shadow lenders are expected to decrease due to enhanced liquidity resulting from cash reserve ratio reductions, according to IIFL analysts. They anticipate greater net interest margin expansion for Cholamandalam Investment, Shriram Finance, M&M Financial, and Bajaj Finance (standalone) compared to PNB Housing Finance and L&T Finance.

And, finally...

Regarding Indian conglomerates, Adani Group shares have gained nearly $20 billion over two sessions after India's market regulator dismissed certain allegations made by Hindenburg Research against the conglomerate and its billionaire founder, Gautam Adani. The rally strengthened Monday following Bloomberg News reports of new investments by SBI Mutual Fund and Citadel Securities in Adani Power, despite GQG Partners reducing its position. With prestigious investors increasing their exposure to Adani entities, the group seems positioned to narrow the $60 billion market value gap compared to levels before Hindenburg's allegations became public in early 2023.

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