As India stole the show at the just-concluded G20 Summit held in New Delhi for the first time, investors were left elated as the announcements not only improved the outlook of certain sectors but the high-profile event also worked as a PR exercise for Prime Minister Narendra Modi’s popularity ahead of the Lok Sabha elections next year.
It was no coincidence that Nifty hit a record high above the 20,000 mark for the first time after the G20 summit with PSU stocks leading the show with non-stop double-digit gains.
“PM Modi’s leadership approval ratings would have definitely gone up during the week. This will certainly help the ruling party in the upcoming elections,” said Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities. Nifty bulls are betting on Modi’s return in the 2024 general elections.
During the G20 summit, India managed to forge certain multilateral initiatives such as the India-Middle East-Europe economic corridor to counter China’s ‘Belt and Road’ initiative, besides launching a global biofuel alliance.
MOUs were signed for two corridors – the East corridor (connecting India to the Gulf), and a Northern corridor (connecting the Gulf to Europe). The corridors would include railways, ship-rail transit networks, and road transport routes. The MOU was signed by India, USA, Saudi Arabia, UAE, the European Union, Italy, France, and Germany and is expected to stimulate economic development through enhanced connectivity and economic integration between Asia, the Arabian Gulf, and Europe. An action plan and relevant timetables to be decided in the next meeting within 60 days.
The news is positive for railways, ports and shipping companies.
“It clearly shows the intent of G20 to make India an important sourcing destination at a large scale. This would have direct and indirect implications. Railway-related infrastructure companies are clearly going to benefit from the corridor. Banks are going to benefit from financing the infrastructure,” said Dr. Vikas Gupta, smallcase Manager and CEO of OmniScience Capital.
Apurva Sheth of SAMCO Securities, however, warned that even as the market is going bonkers about railway stocks, it may be the time to book at least partial profits in these stocks since details about financing or time frame of the projects are yet to be revealed.
Global Biofuel Alliance
This alliance intends to hasten global uptake of biofuels through facilitating technology advancements, intensifying utilization of biofuels, shaping robust standard setting, and certification – through the participation of a wide spectrum of stakeholders. Leaders of Singapore, Bangladesh, Italy, USA, Brazil, Argentina, Mauritius and UAE joined India’s Prime Minister for this launch.
“With Brazil leading the next G20 Presidency, we believe that this initiative will see fruition soon as it is the second largest producer of Biofuels. This will be a big positive for sugar and ethanol plant machinery manufacturing companies,” Seth said.
As G20 members have agreed to triple renewable energy capacity globally by 2030, power and clean tech sectors are also in focus.