Sino-Western tensions and their positive impact on Indian stock markets


Indian companies release their September quarter results as the country celebrates its most anticipated festival, Diwali.

This festive season is the creamy season for home consumption.

Meanwhile, analysts are looking to reality check the billions of Indian shoppers. Additionally, they are also looking to analyze Dixon’s performance.

Not only Dixon, but analysts were also excited to take a look at the performance of Amber Enterprises India Ltd.

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

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

The reason for these two local companies is that it is expected that soon these unknown entities will turn into great giants.

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

Well, if one notices the rout in Chinese stocks that lived for a short time after the ascension of the Chinese president, one can call it a wake-up call.

Beijing, on the one hand, is threatening to move away from the political and economic orbit of the West under President Xi Jinping. This leaves multinational corporations, on the other hand, in need of a backup location to manufacture gadgets.

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

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

It is important to note that Acer, the famous PC manufacturer from Taiwan, declared a partnership with the Indian firm the previous year. Dixon is currently creating monitors for Dell Inc. Soon, the company is expected to start manufacturing Android-based smart TVs, under the umbrella of sub-licensing from Alphabet Inc. A 23% increase in profits and 38% in sales was also seen from a year before the September quarter.

All of these trends make analysts super confident.

For example, Jefferies Financial Group Inc. expects to grow more than 63% per year over three years. The researchers say that “We view Dixon as a structural play on indigenization.”

If we talk about the premium of Indian equities over emerging market equities, 7t is currently three standard deviations above 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 look tired.

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

However, the high price pressures cannot be undermined.

If we talk about the festival season, quarterly consumption volumes have seen a decline of 1% per year for the past three years.

Unilever Plc’s local unit has achieved its lowest gross margin in recent years.

The software services industry is facing the full brunt of weak demand from European customers, despite its high employee attrition rate in the country.

Dixon, while eligible and able to receive subsidies from the Indian government, falls under five different production-related incentive schemes.

India is undoubtedly a resource-constrained economy, still bearing the brunt of the pandemic. In such a situation, Indian Prime Minister Narendra Modi’s five-year, $24 billion industrial policy can be seen as a costly gamble on the manufacturing sector.

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

The ball is now in the court of the CEOs of Fortune 500 companies. If Ch8na+1 is a real theme in the country this festive season, it’s more about China and its not-so-good relationship with the West. .

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