(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:
- Cash boost for consumer stocks
- Hedge funds for retail investors
- Foreigners continue buying spree
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Stock futures point to a subdued start off the back of Wednesday’s holiday and weak global cues. Equities remain overbought, and some traders say risk reward doesn’t favor adding fresh longs ahead of the federal budget next week. Meanwhile, Infosys and Tata Technologies are among prominent companies reporting earnings today.
Cash from the sky: a boon for consumer stocks?
While the consumer sector has trailed the broader market since the election, signs of near-term triggers are emerging. The decision by the state of Maharashtra — the top contributor to national income — to offer cash handouts to graduates, diploma-holders and high school pass-outs could significantly boost near-term consumer demand. This ‘helicopter money’ strategy may set a precedent ahead of state polls, and other states may follow suit if it proves successful. The long-term impact on India’s consumption health is debatable, but for investors in consumer staples and durables, this development is worth noting.
Retail investors to get a taste of hedge fund strategies
Mutual funds may soon be able to offer high-risk products traditionally reserved for wealthy investors. The markets regulator has proposed a plan that would let money managers bring hedge fund-like products to everyday investors. This move aims to reduce the number of unauthorized investment products out there. With this new asset class, mutual funds will offer long-short strategies and inverse exchange-traded funds, making it possible for regular folks to invest.
Foreign investors overcome early year jitters
Overseas investors are continuing their buying spree of local shares, extending the momentum that began after Prime Minister Narendra Modi’s third-term victory. They have been net buyers of over $3 billion so far this year. While this number is not huge in itself, it marks a turnaround from the significant outflows seen earlier this year — as June 6, global funds had pulled $4.8 billion from Indian equities.
Analysts actions:
- Angel One Ltd Cut to Hold at Batlivala & Karani; PT 2,500 rupees
- Bajaj Auto Cut to Reduce at ICICI Securities; PT 8,606 rupees
- HCL Tech Cut to Reduce at Choice Equity; PT 1,615 rupees
- Manappuram Rated New Buy at Jefferies; PT 270 rupees
- Muthoot Finance Rated New Buy at Jefferies; PT 2,220 rupees
Three great reads from Bloomberg today:
- Modi Allies Demanding Billions Pile Pressure on Indian Budget
- India to Fast-Track China Visas After Businesses Hit by Delays
- Big Take: Trump on His Plan for Taxes, Taiwan, the Fed and More
And, finally..
Indian government bonds are gaining favor with foreign investors for yet another reason: their usability as collateral. Investors are increasingly using local sovereign debt for margin requirements in both cash and equity derivative trades. This added benefit has boosted the attractiveness of the nation’s bonds, especially since JPMorgan’s announcement to add India to its emerging market bond index, my colleague Ronojoy Mazumdar notes.
--With assistance from Ronojoy Mazumdar and Chiranjivi Chakraborty.
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