India Market Buzz: Tesla’s India Entry May Not Dent Local Firms, Analysts Say

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(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:

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• Tesla impact
• Jewelry firms
• Cement prices

Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Nifty futures signal a muted start this morning, reflecting the downbeat sentiment in Asian markets following President Donald Trump’s move to curb Chinese investments and proceed with tariffs on Canada and Mexico. Meanwhile, foreign fund selling of local stocks is not showing signs of ebbing, with the persistent outflows pushing the Nifty 50 gauge into oversold territory for the first time since November.

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Tesla’s India entry may not dent local firms

Tesla’s much-discussed plans to introduce its EV cars in India have weighed on shares of local players, mainly Mahindra & Mahindra, in recent weeks. However, analysts do not expect a big dent from the top player’s entry and potential changes to India’s import policy. Media reports have indicated the government may cut import duty significantly and allow 8,000 cars to be shipped into the country annually, against a commitment to invest locally. While such a policy would mean increased competition for local automobile firms, the size of likely imports is not significant, according to HSBC analysts.

Lab-grown diamonds could upset the party of jewelry firms

Lab-grown diamonds have seen rapid adoption in developed countries, while consumers in India are just beginning to warm up to them. Should a similar trend play out locally and lab-grown diamonds gain acceptance among households, jewelry firms may witness some pain, according to Kotak Institutional Equities. That is because margins in synthetic diamonds are lower, compared to their natural counterparts. A higher share of lab-grown diamond studded ornaments in the overall sale mix could affectthe profitability of jewelry companies, and as a result, their valuations, Kotak analysts say.

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Cement prices show divergent trends across the country

Cement firms have not been successful in hiking prices further, but the good news for investors is that the increases taken in the late December quarter have been sustained, according to analysts at IIFL Capital. All-India average cement price is up by 10 rupees per 50-kilogram bag, they write in a report. North and the central regions of the country have seen the highest increase this quarter, while pricing pressure persists in the south and the east. IIFL is bullish on UltraTech Cement, JK Cement, JK Lakshmi Cement and Dalmia Bharat.

Analysts actions:

• NMDC Reinstated Buy at Dolat Capital; PT 90 rupees
• Hindalco Cut to Sell at Avendus Spark; PT 575 rupees
• Mahindra Raised to Buy at Elara Secs India; PT 3,654 rupees

Three great reads from Bloomberg today:

• India Could ‘Significantly Reduce’ Tariffs in UK Trade Deal
• Trump Says Planned Tariffs on Canada, Mexico ‘Going Forward’
• Big Take: Musk Wants Big Bond Market Reward for DOGE Team’s Cuts

And, finally.. 

Some of the analysts, who till recently were wary of Indian shares because of expensive valuations, are having a change of heart. Citigroup has upgraded its recommendation to overweight’ from ‘neutral, saying there is a “meaningful upside” as valuations have become “less demanding” now. The brokerage sees the Nifty 50 Index gaining 15% by year-end. After a steady decline from record high levels in September, the country’s price-to-earnings premium to emerging markets is now down to a near a two-year low.

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—With assistance from Alex Gabriel Simon.

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