Adani Stocks Power Indian Shares Ahead of US Debt Ceiling Talks
Key Highlights :
Indian shares are set to open marginally higher on Tuesday, following the rise in the previous session, as global cues improved on progress in US debt ceiling talks. The Nifty 50 has risen nearly 3% since the beginning of the March-quarter earnings season on April 12, with foreign portfolio investors (FPI) buying domestic equities, which hit a six-month high in the first half of May.
Both President Joe Biden and House Republican Speaker Kevin McCarthy vowed to continue negotiations to reach a consensus, with just 10 days remaining before a potential default. Asian markets were mostly higher, while most Wall Street equities closed higher on Monday after debt ceiling talks resumed in the US.
The rise in Indian shares was powered by information technology (IT) and metal stocks, with credit ratings provider S&P Global Ratings saying Indian IT companies have ‘good defenses against downside risks.’ Foreign institutional investors (FIIs) resumed their buying Indian equities on Monday, purchasing 9.23 billion rupees ($112.9 million) worth of equities.
Deepak Jasani, head of retail research at HDFC Securities, said “consistent foreign buying has resulted in an extension of upmove in the Nifty,” with the band for the Nifty being 18,218-18,432 in the near term. A failure to lift the debt ceiling would trigger not only a default, but also a spike in interest rates, analysts cautioned.
The Indian stock market has been volatile in recent weeks, with investors closely monitoring the US debt ceiling talks and the progress of the coronavirus pandemic in the country. With a potential default looming, investors have been cautious about their investments in Indian equities. However, the strong balance sheets, high recurring cash flows and execution track record of Indian IT companies have provided some support to the market.
