Tensions between China and the West and their positive impact on Indian equity markets

Indian companies are releasing their September quarterly earnings as the country celebrates its most anticipated festival, Diwali.

This festive season is the creamy season for domestic consumption.

During this time, analysts are looking for a reality check of India’s more than one billion shoppers. In addition, they also try to analyze Dixon’s performance.

Not only Dixon, but analysts have also taken an enthusiastic look at the performance of Amber Enterprises India Ltd.

Dixon Technologies (India) Ltd. makes LED TVs for Samsung Electronics Co.

Amber Enterprises India Ltd. supplies air conditioning parts to LG Electronics Inc.

The reason for these two homegrown companies is that such unknown entities are expected to turn into huge giants soon.

Why is such a good result expected? Well, looking at current geopolitics can give us all the answers.

Well, if you notice the defeat in Chinese stocks that lived a short time after the Chinese president’s ascendancy, you could call that a wake-up call.

On the one hand, Beijing threatens to drift away from the political and economic orbit of the West under the country’s president, Xi Jinping. Because of this, multinationals, on the other hand, need a backup location for making gadgets.

And oh, for the China+1 strategy, the situation makes India the largest labor pool.

The exchange analyzes the current order flow. Speaking of Dixon, its market value is currently over $3 billion, thanks to its six-fold jump in two and a half years.

It is important to note that Taiwan’s popular PC maker Acer entered into a partnership with the Indian company last year. Dixon currently makes monitors for Dell Inc. Soon, the company is expected to begin manufacturing Android-based smart TVs, under the umbrella of Alphabet Inc.’s sub-license. A 23% increase in profit and 38% in sales was also seen from a year before the September quarter.

All of these trends make analysts super confident.

Jefferies Financial Group Inc. for example, expect an annual growth rate of more than 63% over a three-year period. The researchers say, “We see Dixon as a structural game against indigenousness.”

When talking about the premium for Indian equities over emerging market equities, 7t is currently three standard deviations larger than the 10-year average. However, one can also feel nervousness here.

Asset quality and margins have improved for domestic banks. However, alternative investment themes currently seem tired.

The fact that the worst wave of inflation is over sounds like a relief. The Reserve Bank of India may be about to pay its interest rate cycle.

However, the increased price pressure should not be undermined.

When we talk about the festival season, quarterly consumption has fallen by 1 percent per year for the past three years.

The local unit of Unilever Plc has achieved the lowest gross margin in recent years.

The software services sector has been hit hardest by weak demand from European customers, despite the country’s high staff turnover.

However, Dixon is eligible and able to receive Indian government grants, which come under the umbrella of five different production-related incentive programs.

India is undoubtedly a resource-constrained economy, which continues to bear the brunt of the pandemic. In such a situation, Indian Prime Minister Narendra Modi’s five-year industrial policy can be seen as nothing more than an expensive gamble on production.

It is said that this huge amount of money could be used more efficiently in health care, education and urban infrastructure.

The ball is now in the CEOs of Fortune 500 companies. If Ch8na+1 is a real theme in the country this holiday season, it’s more about China and its less good relations with the West.

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