(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:
- Nifty’s seasonality wall
- Corporate debt in spotlight
- Rush for dollar bonds
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Nifty futures signal a day of consolidation after ratcheting up a record streak of gains. While seasonality patterns don’t bode well for equities in September, market participants will keep their hopes on a rate cut by the Federal Reserve that might bring in EM flows into the country.
Nifty faces weak September after record run
The Nifty is entering a seasonally weak period, despite a record 12-day streak of gains. Historically, the benchmark has posted losses during September in six of the past 10 years, with an average drop of about 0.6%. That places September alongside February as the only months where Nifty has, on average, declined. However, the Nifty could defy this trend this time, given the strong momentum and the potential for the Federal Reserve to cut rates in the coming weeks.
Top fund moves from sovereign debt to corporate bonds
Some fixed-income investors are turning to corporate bonds as trades on index-related inflows into government debt become increasingly crowded. For instance, ICICI Prudential Asset Management Co. is slashing holdings of sovereign notes in its top-performing dynamic bond fund and shifting to investment-grade corporate bonds. According to Manish Banthia, chief investment officer for fixed income at the $102 billion fund house, most Indian companies have develeraged, reducing the risk in non-financial corporate debt.
Rush to issue dollar bonds as Fed eyes rate cuts
Indian companies are rushing to the dollar-bond market as the Federal Reserve appears set to begin its easing cycle this month. State-owned Canara Bank will start selling its dollar-bond issue on Monday, joining other local firms that have already raised about $10 billion this year. The fundraising has surpassed the total amount raised in each of the previous two years. According to JPMorgan Chase & Co., firms are expected to issue another $4 billion in dollar notes before the end of 2024.
Analysts actions:
- Century Ply Raised to Buy at Elara Secs India; PT 970 rupees
- Gulf Oil Lubricants Rated New Buy at Systematix Shares & Stocks
- Metro Brands Rated New Buy at Elara Secs India; PT 1,873 rupees
Three great reads from Bloomberg today:
- Tata’s Fast Fashion Giant Is Defying India’s Consumer Slowdown
- In India, Some M&A Are More Equal Than Others: Andy Mukherjee
- Five Key Charts to Watch in Global Commodity Markets This Week
And, finally..
A gauge of automobile stocks just capped its worst monthly performance since March 2023, and the decline may continue if the upcoming festive season doesn’t help reduce the high inventory levels at car dealerships. For now, August sales for both Maruti Suzuki India and Tata Motors were lower compared to the same month last year.
--With assistance from Chiranjivi Chakraborty, Divya Patil, Malavika Kaur Makol and Ashutosh Joshi.
©2024 Bloomberg L.P.
