(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:
- Traders bet on Adani
- FirstCry trading debut
- Jubilant back at 100 PE!
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Nifty futures signal another day of consolidation, but traders can lean on the expected $3 billion inflows from global passive funds this month, driven by the MSCI’s index review. HDFC Bank is set to gain the most, with its increased weight in the MSCI EM gauge likely to attract at least $1.5 billion, according to strategists.
Hindenburg saga drags on, but traders bet on Adani
The latest twist in the 19-month Hindenburg saga is unlikely to be as painful as previous episodes. Despite Monday’s volatility in Adani Enterprise’ stock, traders remain optimistic. The three-month volatility skew, which gauges the difference in implied volatility among various options, rose to its highest level since May, suggesting traders expect the stock to rise. Also, the ratio of puts to calls in open interest stayed steady despite the volatility.
Ola’s soaring debut signals red-hot IPO market
Ola Electric, the e-scooter maker, had an impressive debut, with its stock price soaring 44% in the first two days, hitting upper circuit in both sessions. This surge was unexpected, as the shares had been trading at a slight discount in the grey market just before the listing. Ola’s successful start sets the stage for other big names like Hyundai’s India unit and FirstCry, which is set to debut today. Despite initial concerns about Ola’s valuations, the market’s early verdict indicates that there is ample demand to support the influx of IPOs.
Domino’s unit returns to 100 PE!
After nearly three years, Jubilant Foodworks, the operator of Domino’s in India, is once again trading at 100 times its 12-month forward earnings. A painful derating since 2021, driven by a marked slowdown in industry, now seems over, according to Jefferies. The stock has rallied 54% since its November low, but further upside may be limited. During the previous bull run, Jubilant’s price-to-earnings ratio peaked at 105 times — it’s close to that level now.
Analysts actions:
- Avalon Technologies Cut to Hold at Dalal & Broacha
- Bata India Cut to Sell at Goldman; PT 1,300 rupees
- LTIMindtree Raised to Buy at Indsec Securities & Finance
- Sun TV Cut to Hold at Batlivala & Karani; PT 807 rupees
- Tata Consumer Cut to Accumulate at KR Choksey; PT 1,310 rupees
Three great reads from Bloomberg today:
- Thousands of Bankers Are Quitting in India as Boom Takes Toll
- Big Take: Gulf Trillions Force New Concessions from Wall Street
- Almost Nobody Is Buying Hydrogen, Dashing Its Green Power Hopes
And, finally..
Overseas investors’ enthusiasm for Indian stocks is waning. They’ve pulled over $2 billion from local shares in the past two weeks, a selloff largely aligned with growing risk-aversion in global markets. Their net positioning in India’s equity derivatives is also nearing a bearish shift as they have pared their long position in recent weeks. Although local investors continue to keep the faith, a lackluster earnings season and the government’s decision to raise taxes on stock gains have clearly impacted a segment of the world’s fourth-biggest stock market.
--With assistance from Ashutosh Joshi.
©2024 Bloomberg L.P.
