(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:
- Analysts skeptical of IT comeback
- Lenders eye rich Indians
- Mutual fund darlings fall short
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. The Nifty notched its second straight monthly gain in July, leaving traders wondering how much further the rally can extend. As we enter August, futures are already trading above the 25,000 milestone, signaling a positive start to the day. This momentum may sustain now that Fed Chair Jerome Powell has raised expectations of a September rate cut and the market’s liquidity surplus.
Software stocks rally faces analysts’ doubts
India’s IT companies really shined in July, thanks to upbeat comments following the first-quarter earnings. A gauge tracking these stocks jumped about 13% last month, its best perfomance in nearly two years, fueled by hopes of a global tech spending recovery. But not everyone is convinced. Most analysts are predicting negative return for all 10 stocks in the index, except for Infosys, over the next 12 months. It seems there’s a bit of skepticism that this rally might be premature.
Rich Indians are on lenders’ radar
India’s biggest lenders, like ICICI Bank, are racing to tap into the booming wealth-management sector. With household incomes rising, demand for these services is sky-rocketing, according to Bloomberg Intelligence’s Sarah Jane Mahmud. India’s financial wealth could reach $5.5 trillion by 2025, prompting local players to leverage digital tech to compete with global rivals. Recently, top brokerage Angle One accounced a 2.5-billion rupee investment in a wealth platform.
Mutual fund darlings underwhelm in July
Four of the five most-owned stocks by India’s mutual funds had a rough July, trailing the Nifty 50 Index and shining a light on large-cap struggles. Axis Bank had its worst performance relative to the gauge since 2020, and Reliance Industries underperformed by the most in two years. HDFC Bank, which makes up over 6% of mutual funds’ equity assets, ended a four-month streak of outperformance. The sole exception was Infosys, which saw its biggest beat on the Nifty in four years after raising its full-year sales growth guidance.
Analysts actions:
- Aurobindo Pharma Rated New Buy at JM Financial; PT 1,640 rupees
- Awfis Space Rated New Add at ICICI Securities; PT 757 rupees
- Coal India Cut to Add at Axis Capital Limited; PT 570 rupees
- Dixon Tech India Cut to Hold at CLSA; PT 11,400 rupees
- HDFC Life Cut to Add at ICICI Securities; PT 739 rupees
- HPCL Cut to Hold at Anand Rathi Securities; PT 474 rupees
- IndiaMart Raised to Reduce at Avendus Spark; PT 2,930 rupees
- Navin Fluorine Cut to Reduce at Centrum Broking; PT 3,656 rupees
- SRF Cut to Hold at Way2Wealth Brokers; PT 2,830 rupees
Three great reads from Bloomberg today:
- India’s $45 Billion Startup Implosion Fuels Doubt of Tech Future
- Quant Funds Face Profit Risk as India Moves to Curb Options Boom
- Big Take: Thousands of H-1B Visas Go to Firms Gaming the System
And, finally..
Indian equities are enhancing their appeal as a stable option. While domestic money has fueled the rally in recent years, the country’s promise of rapid and steady growth makes it hard for investors to ignore local shares, even with their rich valuations. Earlier this year, some investors shifted from Indian to cheaper Chinese equities, but the strategy has struggled. Now, Indian shares are on track to regain their premium over Chinese stocks.
--With assistance from Ashutosh Joshi and Chiranjivi Chakraborty.
©2024 Bloomberg L.P.
