Indian Stock Market Braces for Subdued Opening Amid Middle East Tensions
Indian stocks are poised for a muted start today, following Wednesday’s market holiday, as traders remain cautious amid rising tensions in the Middle East. Foreign investors have continued their selling streak for three consecutive days, likely influenced by the massive rally in Chinese equities. With limited bullish catalysts on the horizon, the market sentiment may stay bearish as the week progresses.
Gold Loan Companies Face Slowdown Due to RBI’s Tightened Regulations
The surge in gold prices is proving challenging for shadow banking institutions that provide gold-backed loans. Shares of Manappuram Finance and Muthoot Finance declined on Tuesday after the Reserve Bank of India (RBI) pointed out procedural lapses within the sector. With the central bank closely monitoring shadow lenders showing significant growth in their gold loan portfolios, the bearish trend may continue. Citi analysts predict that gold lenders are likely to adopt a more conservative approach to comply with prudential norms in the future.
Rupee Set for Further Decline Amid Widening Current Account Deficit
The Indian rupee, which was the worst-performing currency in Asia last quarter, is expected to face further challenges. A growing current account deficit, coupled with rising gold imports driven by a recent customs duty cut, could put additional pressure on the currency. With China now emerging as a favorable investment destination, foreign inflows into India may slow. Mizuho Bank forecasts the rupee may fall to 84.10 per U.S. dollar by the end of December, a 0.3% decline from Tuesday’s close.
Cement Demand Rises, But Excess Capacity Poses Challenges
Cement manufacturers are eyeing a potential demand surge as the monsoon season ends, with InCred Equities projecting a 15%-20% jump in demand. However, the industry is still grappling with excess capacity, which may keep cement prices volatile despite rising demand. Prices are expected to stabilize only once the sector’s capacity utilization exceeds 80%, according to InCred.
