Adani Effect Propels India Stocks Past Most World Markets in ‘22

(Bloomberg) — India is expected to be one of the best performing global equity markets this year, overcoming concerns over higher interest rates and an economic slowdown that have gripped peers.

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S&P BSE Sensex Index 2022 up 3% so far, the biggest gain in the world after measures in Singapore and Indonesia. A strong earnings stream lifted India’s key benchmarks to record highs, leading the market to outperform the UK. Meanwhile, the MSCI All Country World Index fell 20%.

This year’s winners include stocks linked to billionaire Gautam Adani and banks, boosted by a sharp recovery in credit demand. Among the biggest losers were stocks in technology firms, which slumped after public debuts, and software outsourcing providers, which faced a possible slump in overseas demand.

But the outlook is bleaker. Rising valuations are expected to drive the market lower next year, with Goldman Sachs Group Inc. calls the results worse compared to China and South Korea.

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Slowing global growth could hurt the country’s economy in the near term, even if its “structural promise” remains significant long-term traction, JPMorgan analyst Sanjay Mookim wrote this month.

Here are some of the highlights of 2022. share changes:

Adani companies

Ports-to-energy conglomerate Adani has seen the value of at least two of its seven listed companies more than double this year, led by Adani Power Ltd., which has benefited from increased electricity demand. Flagship Adani Enterprises Ltd., which became the second group company to join the NSE Nifty 50 index, rose 113%. According to the 12-month analyst consensus, shares of Adani Wilmar Ltd., the group’s joint venture consumer food business, could rise another 24% from current levels. Investors sold off the group’s shares of late amid sharp valuations.

Bank recovery

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The S&P BSE Bankex has rallied 18% this year on the back of a successful deleveraging of the sector’s distressed debt, the creation of a bad bank to offload problem loans and a sharp recovery in credit demand. Uday Kotak, the billionaire CEO of Kotak Mahindra Bank Ltd., called the banking recovery a “Cinderella” moment. Still, Macquarie Capital analyst Suresh Ganapathy said there is a need to be wary of the widening gap between deposit and credit growth. Analysts estimate that State Bank of India, the country’s biggest lender, has gained 25% this year and could see a similar increase over the next 12 months.

IPO Landing

Lingering disappointment following large IPOs has sent fintech firm Paytm and online insurance marketplace Politicbazaar down more than 50 percent this year. after 2021 made its commercial debut at the end of Other decliners include delivery startup Zomato, beauty e-tailer Nykaa and logistics owner. company Delhivery. Life Insurance Corp of India, which overtook Paytm to become India’s biggest IPO, has lost more than a quarter of its value since May.

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Software decline

Outsourcing providers were among the worst performers amid worries about a possible recession in the US and Europe. Majors including Infosys Ltd. and Tata Consultancy Services Ltd. declined, sending the sector’s gauge to its worst since 2008. Big IT services companies are bracing for a “longer winter,” said Abhishek Kumar, securities analyst at JM Financial Institutions. .

Cheaper generic drugs

Drug exporters like Aurobindo Pharma Ltd. and Divi’s Laboratories Ltd., also took a hit as generic drug prices in the U.S. fell. Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance Co., said drugmakers may focus on profitable complex generics in response to lower prices overseas.

– With the help of Lianting Tu.

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