Nifty 50 Eyes New Record Despite Sluggish Wall Street Cues

Aug 27,2024

(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:

Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. Nifty futures signal another dull day for traders in Mumbai, with Asian markets seeing weakness ahead of the Nvidia earnings. The Nifty is eyeing a 10th straight day of gains, and is within a whisker from printing a new high. With cues from Wall Street also sluggish, bears may gain an upper hand for now.

Primary market gains favor with global funds

Foreign investors are flocking to Indian IPOs while steering clear of the country’s listed stocks due to their high valuations. So far this year, they’ve snapped up $6.6 billion of shares via first-time share sales, preferential allotments and sales to large investors — the highest since the record year of 2021. Meanwhile, they’ve pulled $3.8 billion from local shares during the same period. For global funds, the allure of getting in on the ground floor with new companies remains strong, especially with nearly $11 billion in IPOs, including that of Hyundai Motor Co’s local unit, expected in the second half of the year.

Investors eye recovery as Zee’s legal battle with Sony ends

The closure of the corporate battle between Zee Entertainment and Sony India has lifted the burden on the former’s stock price. With the legal dispute now behind them, Zee and its shareholders can now move on to more important matters, such as improving the company’s financial health and competing with the growing threat from over-the-top platforms. Zee’s shares surged by about 12% after the news, indicating that the ordeal had been weighing on the company’s valuations.

Bonds set to outshine Asian peers on Fed pivot

Indian bonds are likely to outperform their Asian peers if the dovish shift in Fed policy signaled during Jackson Hole bears out next month. Rupee-denominated debt has shown a stronger correlation with Treasury-yield moves than most other Asian markets this year, behind only the Philippines. A Fed pivot toward easing may prompt a similar response from the Reserve Bank of India, further boosting bonds.

Analysts actions:

Three great reads from Bloomberg today:

And, finally..

While foreigners are bullish on Indian bonds, they’re avoiding equities due to their expensive valuations. They bought $1.6 billion of debt in August and pulled $1 billion from shares. The appeal of bonds is driven by the global index inclusion and a favorable growth-inflation scenario, while local equities remain among the most expensive globally, trading at about 24 times 12-month forward earnings.

--With assistance from Malavika Kaur Makol and Ronojoy Mazumdar.