(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:
- Retail trading risks
- Shrimp exporters surge
- Buyback taxation
Good morning, this is Ashutosh Joshi, an equities reporter in Mumbai. Nifty stock futures signal a weak start this morning as traders brace for impact from a risk-off sentiment across Asia and the tech-led selloff on Wall Street overnight. The market seems poised for its first weekly loss in about two months and there’s not much in the way of bullish catalysts to lift the mood.
Retail traders beware: Most intra-day investors lose money
Voices against speculative trading are getting louder. A study by Sebi released yesterday evening found that 71% of intra-day traders in 2022-23 lost money, with the proportion rising to 80% for those making over 500 trades a year. This comes days after the government raised taxes on equity derivatives trading and linked excessive risk-taking to a “gambling instinct.” A similar report last year had found 9 out of 10 active retail traders losing money on derivatives. Both studies show how small investors face long odds when hoping to make a quick buck from equities trading.
Shrimp exporters are big winners of budget support
Shares of Avanti Feeds, Apex Frozen Foods and Waterbase have jumped about 20% each in the past two days after the budget was unveiled. New measures from the government call for additional financing for shrimp farming, processing and export while lowering taxes on certain feed imports. US import demand has surged amid all-you-can-eat promotions such as the “Endless Shrimp” offer at Red Lobster, a unit of Avanti Feeds investor Thai Union Group Pcl.
Buyback taxation changes take away arbitrage
For companies with plenty of cash, share buybacks used to be a tax-efficient way to return money to investors. Not anymore. The government has proposed taxing recipients at their slab rate, putting the levy on par with dividend payments. These measures, along with the hike in capital gains tax, makes it more costly for investors to realize their market gains. The buyback market had already cooled from it’s 2017 high, with about $800 million of shares being acquired this year through June, according to Prime Database.
Analysts actions:
- Glenmark Life Rated New Buy at Investec; PT 1,150 rupees
- JSW Steel Cut to Reduce at Centrum Broking; PT 895 rupees
- Kajaria Ceramics Cut to Neutral at SKP Securities Limited
- Persistent Systems Cut to Hold at KR Choksey; PT 4,901 rupees
Three great reads from Bloomberg today:
- India May Tweak Rules to Check Hot Flows on Bond Index Entry
- HK Peak Mansions Sold for $110 Million as Family Offloads Assets
- The Global Hunt for India’s Biggest Art Thief
And, finally..
The small cut in borrowing announced in the federal budget didn’t impress bond traders much. Yet, sticking to fiscal consolidation keeps Asia’s third-largest economy in the running for a credit rating upgrade, especially after S&P revised its outlook to positive. With inflation contained and inflows from global bond index inclusion, the nation’s bonds have handed investors the best returns in Asian emerging market local currency sovereign debt this year.
--With assistance from Alex Gabriel Simon and Ronojoy Mazumdar.
©2024 Bloomberg L.P.
