While India’s export-import (exim) imbalance may be a cause for concern, the steady improvement in trade activity is brightening the prospects for ports and logistics firms. Overall container volumes related to exim trade grew 9.5% in the September quarter. In the preceding two quarters, they grew by 8% and 11.5%, respectively, shows data compiled by Kotak Institutional Equities.

According to Maersk, the world’s largest container shipping company, India’s growth figures are significantly higher than the estimated global containerized demand growth of 3-4%. The sharp depreciation in the rupee is making Indian products more competitive, helping exports, even as imports continue to rise.

“India is emerging as a favorable trade destination due to competitive pricing," Steve Felder, managing director of Maersk Line-South Asia, said in a statement. Local data corroborates this view. Container cargo growth at major ports increased by about 8% in April-November this year, data compiled by JM Financial Institutional Securities Ltd shows.

Apart from the exim container traffic, port operators are also witnessing an increase in trans-shipment volumes. “These (trans-shipment volumes) now account for more than 5% volume share for all-India ports based on October 2018 data, versus a negligible share earlier," analysts at Kotak said in a note.

With a dominant portion of these volumes being captured by the Mundra and Hazira ports, the volume resurgence should benefit port operators such as Adani Ports and Special Economic Zone Ltd, which operates the Mundra port.

The steadily growing traffic should also benefit container rail operators such as Container Corp. of India Ltd (Concor), which has seen a steady increase in volumes in recent quarters.

These stocks are reflecting some of the optimism, though the performance has been mixed till now. Against a 6.6% loss in the BSE 500 index, shares of Concor rose 2.7% in the last three months. Adani Ports, on the other hand, is down 0.5%.

That said, much depends on the trade momentum in the global economy. Recently, Moody’s downgraded the rating of Maersk, citing increasing risk to global trade in 2019 as one of the reasons. A slow-down in global trade can weigh on container traffic at ports. Also, the recent reduction in diesel prices and hike in haulage charges by Indian Railways can undermine the profitability of the container train operators, warn analysts at Kotak.

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