(Bloomberg) -- Before the trading day starts we bring you a digest of the key news and events that are likely to move markets. Today we look at:
- Hindenburg-Sebi row
- India to narrow gap with China
- Rupee nears key 84 mark
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Traders are eyeing a muted start this morning amid the Hindenburg-Sebi controversy over the weekend, while Asian markets turn their attention to this week’s slew of US data prints for guidance on potential interest rate cuts. In India, traders will closely monitor MSCI’s upcoming review and the recent slide in the rupee, adding to cautious sentiments.
Sebi faces distraction amid Hindenburg’s new claims
Hindenburg Research’s latest salvo has pulled the country’s securities regulator and its first woman chair further into the Adani Group saga. The US short-seller accused Sebi chief Madhabi Puri Buch of conflicts of interest that allegedly prevented a thorough investigation into claims of manipulation and fraud at the conglomerate — allegations Buch has strongly denied. The regulator announced that 23 of 24 investigations into Adani are complete, with the final one “close to completion.” While Hindenburg’s new claims may not impact the stock market as sharply as its report against Adani in early 2023, they may serve as a distraction for Sebi as Buch nears the end of her term and the regulator works to slow down the rapid growth in India’s equity derivatives markets.
India is set to close the gap with China
Analysts predict that India’s weight in the MSCI’s emerging market index will rise by at least one percentage point after the index provider’s upcoming review. This shift would bring the country almost on par with China’s position in the gauge. The adjustment is expected to attract more passive flows into Indian equities and could also make the EM category more appealing to global investors who are wary of China’s dominance over the index.
Traders brace for RBI support as rupee nears key level
While emerging market currencies capped their best week this year, with the MSCI EM currency gauge rising 0.7%, the rupee remained flat. This continues the trend of the rupee showing resilience against a strong dollar but underperformance when other developing markets rally. With the rupee now hovering very close to the significant 84 per dollar mark, traders are bracing for increased intervention by the RBI to limit the size of its moves.
Analysts actions:
- Adani Green Rated New Buy at Emkay Global; PT 2,550 rupees
- Biocon Cut to Reduce at HSBC; PT 300 rupees
- Century Ply Raised to Buy at HDFC Securities; PT 825 rupees
- Deepak Nitrite Raised to Buy at Elara Secs India
- JB Chemicals Cut to Sell at Elara Secs India; PT 1,713 rupees
- Oil India Cut to Underperform at CLSA; PT 460 rupees
- Radico Khaitan Raised to Add at HDFC Securities; PT 1,850 rupees
- Shree Cement Cut to Accumulate at KR Choksey; PT 26,083 rupees
- Steel Authority Cut to Sell at Batlivala & Karani; PT 104 rupees
- Vedanta Cut to Hold at Antique Stock Broking; PT 457 rupees
- Zydus Lifesciences Cut to Reduce at ICICI Securities
Three great reads from Bloomberg today:
- Carry-Trade Blowup Haunts Markets Rattled by Rapid-Fire Unwind
- Adani Saga’s New Twist Is Great Political Fodder: Andy Mukherjee
- The Fake Indian Cricket League Created for Real Online Betting
And, finally..
Hybrid mutual funds, which invest in a mix of stocks and bonds, are luring large flows as markets scale new highs. In July, they took in a net 174 billion rupees ($2 Billion) inflows, nearly half the amount that actively managed equity funds brought in. This shift comes after India’s surprise decision to raise taxes on equity gains. Hybrid funds, which can allocate up to 65% of their assets to stocks, offer a tax advantage, as gains from their sale are taxed similary to equity funds — that is, more favorably than pure debt funds.
--With assistance from Ronojoy Mazumdar and Chiranjivi Chakraborty.
©2024 Bloomberg L.P.
