Indian Retail Investors Stay Hooked on Adani Shares

(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 Ashutosh Joshi, an equities reporter in Mumbai. Despite the recovery in sentiment, bulls may face hurdles as the Nifty index faces multiple resistances on the charts. Already, Nifty futures indicate a weak opening today, with key Asian market trading mixed. Meanwhile, the rebound in Adani shares suggests that retail investors are attempting to bottom fish, hoping to cash in again on any recovery.

Old habits persist for small investors

Retail investors’ tendency to take on riskier bets remains strong. Their holdings in eight of the Adani Group’s 10 listed companies rose between December 2022 and September-end this year, leaving them heavily exposed to last week’s $30 billion selloff in those shares. Investors who bought the group’s shares during the 2023 meltdown triggered by Hindenburg report and held on reaped significant gains as prices rebounded. Shareholding data this quarter will show if more small investors bought into the recent declines to replicate this playbook.

Money managers gear up for more action

Mutual funds are now the top choice for retail investors looking to tap into the stock market, as evident from the $35 billion of net inflows into equity plans this year. This trend shows no signs of slowing, and new asset managers are entering the fray. With competition set to intensify, some of the smaller players might either cash out or seek funding to stay in the game. For instance, Edelweiss is considering selling a stake in its mutual fund arm, while Canara Robeco has already announced plans for an IPO. Expect more action in this space. 

Bulls brace for speed breakers ahead

The Nifty’s biggest two-day jump since early June may have some participants believing that the index has created a strong base for its next upmove. But fundamentals suggest otherwise. According to Nuvama, the consensus is penciling net income for BSE 500 companies to grow by 17%-18% in the second half of the fiscal year ending in March, compared to just 9% growth in the first half. That’s a tall order as demand remains weak, margin tailwinds have faded, and the global recovery looks uncertain.

 Analysts actions:

Three great reads from Bloomberg today:

And, finally.. 

Is the Nifty finally out of the doldrums? Not so fast, say the chartists. Sure, the benchmark has jumped about 5% from its Nov. 21 low, but it faces multiple hurdles ahead. First up is the 38.2% Fibonacci retracement at 24,415. Then comes the right shoulder of the bearish head-and-shoulders pattern at 24,537. Finally, there’s a tough zone between the 24,700 and 24,740 levels, where both the 50-day and 100-day averages sit. 

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--With assistance from Kartik Goyal, Savio Shetty and Chiranjivi Chakraborty.

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