(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:
- Swiggy’s market debut
- Local funds’ buying power
- Passive funds boom
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Asian stocks are a sea of red this morning as investors await the release of US inflation data. Back in India, the October CPI print hit a 14-month high in the midst of a dismal earnings season. All that the bulls can hope for now is a technical relief rally.
Swiggy needs to show investors the money
Investors probably won’t give a standing ovation for the e-commerce major’s market debut as they did when rival Zomato went public in 2021. Still, Swiggy can learn from Zomato’s epic stock meltdown the following year and an equally dramatic comeback since then. The best way for Swiggy to close the valuation gap with Zomato is to set clear profitability timeline and stick to the milestone targets. Investors love a good story, but Swiggy should bear in mind that these days, they’re quick to hit the sell button if earnings don’t meet estimates.
Local funds running out of buying power
Foreigners have dumped over $13 billion of local shares since October, and despite the equally strong buying by domestic insitutions, some market players are beginning to feel concerned. The reason: an accelerating equity supply from founders and private equity investors. IPOs and stake sales since start of this fiscal year on April 1 are now 1.5 times the net inflow into mutual funds. The ongoing weakness in the market shows that even local funds don’t have unlimited firepower.
Passive funds boom as millennials lead the charge
Passive funds in India are growing in popularity, thanks to a mix of regulatory push, ease of technology, and low fees. Assets in this category have grown more than 50% in the past year, reaching just over 11 trillion rupees ($130 billion). Index funds are especially popular among the millennial and Gen-Z, compared to Gen-X and Boomers, according to local asset manager Motilal Oswal, who expects the momentum to continue. That said, expect some ups and downs as this new breed of investors get their first taste of a bear market.
Analysts actions:
- Britannia Raised to Buy at Centrum Broking; PT 5,936 rupees
- Zydus Lifesciences Raised to Outperform at CLSA; PT 1,100 rupees
- NTPC Reinstated Outperform at Macquarie; PT 475 rupees
Three great reads from Bloomberg today:
- Swiggy’s IPO Debut Tests Demand for India’s Rapid-Delivery Firms
- China Taps Global Bankers for Feedback to Lift Market Confidence
- Big Take: Trump’s Win Puts Musk in the White House’s New C-Suite
And, finally..
China’s latest stimulus push sparked a record-beating rally in the country’s onshore and offshore equities, and it’s also helped Hong Kong topple India to reclaim its spot as the world’s fourth-biggest stock market. With broader selloff pushing Indian shares close to correction territory, the gap between the market value between the two has now crossed $1 trillion. It just goes to show that in politics and the stock markets, popular sentiment can change overnight.
--With assistance from Chiranjivi Chakraborty and Kartik Goyal.
©2024 Bloomberg L.P.
