(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:
- Reliance retail’s subdued show
- Big investors cautious before budget
- IT meltdown exposes investor fragility
Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. There’s a lot happening in Asia today, with the US Presidential race adding a dash of uncertainty to markets and China’s central bank cutting a key short-term policy rate. However, local traders are mainly focused on tomorrow’s federal budget, which will influence the sustainability of the one-way rally we’ve seen since early June.
Reliance earnings shows retail weakness
Sales growth in Reliance Industries’ retail business has contracted to the lowest in several quarters, as per the company’s latest results that came after markets hours Friday. The revenue per square feet fell 10% on-year, as per Jefferies, who said management prioritized margins over growth. The retail business contributed over 30% to the conglomerate’s revenue.
Domestic institutions lighten up before budget
Investors have grown cautious about the breathtaking rally ahead of the budget. The broad-based BSE 500 Index tumbled last week, marking its first weekly loss since end-May. Industrials and capital goods, which have led the record-setting rally, saw profit booking. BSE’s indexes for these sectors each shed 4.5%. The selling was driven by local institutions, who offloaded $506 million of shares.
Global IT meltdown exposes investor vulnerability
Friday’s global IT outage has reignited concerns about technology risks for market players, including India’s army of retail investors. The event hit operations at discount brokerages like Angel One and IIFL Securities. Earlier this month, investors lost money due to an order processing glitch on the BSE, Asia’s oldest stock exchange. Additionally, recurring snags at Zerodha have contributed to the firm losing its top spot as the nation’s largest broker. Despite regulatory efforts to minimize such issues, investors remain vulnerable to such episodes.
Analysts actions:
- Dalmia Bharat Cut to Underweight at Morgan Stanley
- HDFC Bank Cut to Accumulate at Dolat Capital; PT 1,800 rupees
- Infosys Cut to Hold at ICICIdirect.com; PT 2,000 rupees
- JSW Energy Cut to Hold at Batlivala & Karani; PT 684 rupees
- JSW Infra Cut to Reduce at HSBC; PT 280 rupees
- Rallis India Cut to Sell at Axis Capital Limited; PT 250 rupees
- Wipro Cut to Sell at Dolat Capital; PT 510 rupees
Three great reads from Bloomberg today:
- Biden’s Exit Puts Trump Trade in Doubt as Election Gets Re-Set
- China’s Central Bank Cuts Key Short-Term Rate to Buoy Economy
- Big Take: The CrowdStrike Outage Reveals Global IT Fragility
And, finally..
Mutual funds in India have seen their assets more than double since the Covid outbreak in early 2020. There’s ample room for further growth as only about 5% of Indian household savings flow into financial products. According to ICRA Analytics, total assets are on track to surpass 100 trillion rupees within the next 2-3 years, as the resilience of the local market and improved growth prospects boosts investor confidence.
--With assistance from Ashutosh Joshi and Chiranjivi Chakraborty.
©2024 Bloomberg L.P.
